Key Takeaways Costco saw Q3 membership income rise 10.4% and paid memberships grow 6.8% year over year. COST's e-commerce sales rose 14.8% as logistics deliveries jumped 31% on strong big-ticket demand. BJ posted a 35% gain in digitally enabled sales and plans to add 25-30 new clubs over two years.Costco Wholesale Corporation (COST) and BJ's Wholesale Club Holdings, Inc. (BJ) are two prominent players in the membership-based retail warehouse sector. Costco, with a market capitalization of approximately $4 ...

Core Viewpoint - Costco Wholesale Corporation is currently trading at a high forward P/E multiple of 52.96X, indicating it may be overvalued compared to the industry average of 32.41X and the S&P 500's 20.97 [1][7] Valuation and Performance - The stock has risen 11.9% over the past month, outperforming its peers, but this steep increase may limit near-term upside potential [2][3] - Costco's valuation is above its median P/E level of 50 observed over the past year, suggesting caution for new investors [1][7] Membership and Growth - Costco ended Q2 of fiscal 2025 with 78.4 million paid household members, a 6.8% year-over-year increase, with executive memberships growing by 9.1% [9] - Membership fee income increased by 7.4%, aided by a recent fee hike contributing approximately 3% growth in the quarter [9] E-commerce and Digital Transformation - E-commerce comparable sales grew by 20.9% in Q2, reflecting the success of Costco's digital transformation strategy [10] - The company is enhancing its online product assortment and fulfillment efficiencies to drive traffic and sales [10] Expansion Plans - Costco plans to open 28 new locations by the end of fiscal 2025, including 25 new warehouses and three relocations [11] Competitive Landscape - Costco is outperforming competitors like Ross Stores, Dollar General, and Target, which are also investing in enhancing customer experience [12] - The competitive environment is intensifying, necessitating continued focus on maintaining margins and managing operational costs [13] Financial Estimates - The Zacks Consensus Estimate for the current fiscal year has risen to $17.96, while the estimate for the next fiscal year has decreased to $19.73, indicating expected growth rates of 11.5% and 9.9% respectively [14]