Costco's $14B Cash Pile Signals Strong Start to Fiscal 2026

Financial Performance - Costco concluded fiscal 2025 with a strong balance sheet, holding $14,161 million in cash and cash equivalents, up from $9,906 million a year earlier, reflecting disciplined financial management [1][8] - The company's net cash position increased by nearly $4,255 million, supported by aggressive capital deployment while funding significant investments and returning value to shareholders [2] - Costco generated $13,335 million in net cash from operating activities over the 52 weeks ended Aug. 31, driven by efficient working capital management, allowing for significant reinvestment in the business [3] Capital Expenditures and Shareholder Returns - The company spent just under $5.5 billion on capital expenditures, focusing on accelerated warehouse growth, remodels, and new manufacturing facilities [3] - Costco allocated $2,183 million for dividend payments and $903 million for stock repurchases, contributing to a robust cash buffer of $14,161 million, which exceeds its long-term debt of $5,713 million [4][8] Market Position and Valuation - Costco's share price increased by 4.7% over the past year, underperforming the industry's growth of 6.7%, while Walmart shares rose by 30.5% and Target shares declined by 38.7% [5] - The forward 12-month price-to-earnings ratio for Costco stands at 46.28, higher than the industry average of 30.12, indicating a premium valuation compared to Target and Walmart [6][9] Sales and Earnings Estimates - The Zacks Consensus Estimate for Costco's current financial-year sales implies a year-over-year growth of 7.7%, with earnings per share expected to grow by 11.1% [10] - Current estimates for sales in the upcoming quarters are $67.20 billion for the current quarter and $296.49 billion for the current year, with year-over-year growth estimates of 8.12% and 7.72% respectively [11] - Earnings per share estimates for the current year stand at $19.97, reflecting a year-over-year growth of 11.01% [12]