Is Costco Stock a Buy as Sales Continue to Sizzle?

Core Insights - Costco Wholesale reported strong sales growth in its fiscal 2026 second-quarter results, with a year-to-date stock increase of over 17% in 2026, although it is up only 4.7% over the past year [1] Sales Performance - Fiscal Q1 revenue increased by 9% year over year to $68.31 billion, with adjusted earnings per share (EPS) rising 14% to $4.58 [2] - Digital revenue surged 22.6%, with traffic increasing by 32% and average order value up by 15% [2] - Same-store sales rose by 6.7% when adjusting for gasoline prices and foreign currency, with U.S. same-store sales up 6.4% and Canadian comparable-store sales increasing by 7.6% [2] Transaction and Traffic Growth - Excluding gasoline and currency impacts, Costco's average transaction value rose by 3.5% globally and 3.9% in the U.S., while traffic grew by 3.1% worldwide and 2.4% in the U.S. [3] - The company experienced strong double-digit growth in its pharmacy and food court businesses [3] Membership and Revenue - Membership-fee revenue climbed 13.6% year over year to $1.36 billion, with paid memberships increasing by 4.8% to 82.1 million households [4] - Higher-cost executive memberships rose by 9.5% to 40.4 million, and the membership renewal rate was 92.1% in North America and 89.7% worldwide [4] Expansion Plans - Costco opened three new locations in the quarter and plans to open 18 more this fiscal year, totaling 28 new net openings, bringing the total to 924 warehouses globally [5] - The company aims to open 30 or more warehouse stores annually in the coming years [5] Stock Valuation - Despite strong sales performance, Costco's stock is considered pricey, trading at a forward price-to-earnings ratio (P/E) of nearly 49, and the company will not benefit from prior membership fee increases [6]