Is Costco's January Sales Surge Fueling a Bigger 2026 Rally?

Core Insights - Costco Wholesale Corporation (COST) started calendar year 2026 with strong comparable sales growth, indicating its attractiveness to value-conscious consumers [1] Sales Performance - For the four weeks ending Feb. 1, 2026, Costco reported a 7.1% year-over-year increase in total comparable sales, with U.S. sales up 5.8%, Canada up 11.4%, and Other International markets up 9.5% [2] - Adjusted U.S. comparable sales increased 6.8%, while Canada and Other International markets saw gains of 8.2% and 2.7%, respectively, leading to an overall growth of 6.4% in January [3] - Digitally enabled comparable sales surged 34.4% in January, reflecting strong online performance, with net sales for January rising 9.3% to $21.33 billion from $19.51 billion last year [4][8] Competitive Landscape - Costco's shares have declined 5.8% over the past year, contrasting with the industry's growth of 6.9%, while Dollar General shares increased by 97.8% and Target shares decreased by 12% [5] Valuation Metrics - Costco's forward 12-month price-to-earnings ratio is 47.67, higher than the industry average of 33.35, indicating a premium valuation compared to Target and Dollar General [6][9] Financial Estimates - The Zacks Consensus Estimate for Costco's current financial-year sales and earnings per share suggests year-over-year growth of 7.9% and 12.2%, respectively, with a projected 7.1% rise in sales and 9.3% growth in earnings for the next fiscal year [10] - Current quarter sales estimates stand at $69.18 billion, with a year-over-year growth estimate of 8.57% [11] - Current quarter earnings per share estimates are at $4.53, reflecting a year-over-year growth estimate of 12.69% [12]