Core Viewpoint - Costco experienced a challenging year in 2025, with its stock declining by 6%, contrasting with a 16% gain in the S&P 500, indicating a rare and significant underperformance for the warehouse retailer [1] Company Performance - The decline in Costco's stock is notable as it marks a significant deviation from the overall market performance, highlighting potential concerns regarding the company's competitive positioning and operational challenges in the current economic environment [1] Market Context - The S&P 500's 16% gain during the same period underscores a broader market strength, suggesting that Costco's struggles may be more pronounced in comparison to its peers and the overall retail sector [1]

Core Viewpoint - Costco is facing a class-action lawsuit for allegedly misleading advertising regarding its Kirkland Signature Seasoned Rotisserie Chicken, claiming it contains no preservatives while it actually includes two added preservatives: sodium phosphate and carrageenan [1][2]. Group 1: Lawsuit Details - The lawsuit was filed in the U.S. District Court for the Southern District of California, asserting that Costco's advertising creates a false impression that the Rotisserie Chicken is preservative-free [2]. - Plaintiffs argue that customers make purchasing decisions based on the "preservative free" label and were unable to ascertain the presence of added preservatives before purchase [3]. - The lawsuit claims that ingredient disclosures, if present, were inadequately displayed in small print and did not clarify the preservative function of the ingredients [5]. Group 2: Consumer Trust and Company Accountability - The lawsuit emphasizes that consumers rely on clear claims like "No Preservatives" when making food choices for themselves and their families [7]. - Legal representation for the plaintiffs stated that Costco's ingredient list contradicts its marketing claims, seeking to hold the company accountable for misleading its customers [8]. Group 3: Market Impact - Following the news of the lawsuit, Costco's stock traded around $977, reflecting a decrease of approximately 0.5%, although shares have increased over 13% year-to-date [11].

Core Insights - Costco Wholesale Corporation is expanding its global presence by increasing the number of warehouses and driving membership growth to meet rising demand for value-driven retail [1] Expansion Strategy - The company opened eight new locations in the first quarter of fiscal 2026, including a third warehouse in France, four new U.S. locations, and two additional Canadian business centers [2] - Management plans to open 28 net new warehouses during fiscal 2026 and aims for 30 or more annual openings in subsequent years [2] Real Estate and Site Acquisition - To support expansion, Costco has expanded its real estate team and adopted creative site acquisition methods, including refurbishing existing structures [3] - The strategy includes relocating high-volume warehouses to larger sites with expanded parking and fuel stations, with five relocations planned for fiscal 2026 [4] Sales Performance - New warehouses are reaching maturity faster, with fiscal 2025 openings generating an annualized $192 million in sales per location during the first year, up from $150 million two years prior [5] Competitive Positioning - Costco's shares have increased by 1.6% over the past year, compared to the industry's growth of 11.9%, while Dollar General shares have rallied by 106.7% and Target's shares have dropped by 19% [6] Financial Metrics - Costco's forward 12-month price-to-earnings ratio is 46.30, higher than the industry average of 31.93, indicating a premium valuation compared to Target and Dollar General [9] - The Zacks Consensus Estimate for Costco's current financial-year sales implies a year-over-year growth of 7.6%, with earnings per share expected to grow by 11.7% [10] Sales and Earnings Estimates - Current quarter sales estimate is $68.90 billion, with a year-over-year growth estimate of 8.12% [11] - Current year earnings per share estimate is $20.09, reflecting an 11.67% year-over-year growth [12]

Core Insights - Costco has generated a total return of 16,810% over the past 30 years, indicating its strong performance as a retail stock [1] - The company currently has a market capitalization of $411 billion and reported net sales of $270 billion for fiscal 2025 [2] Company Strengths - Costco's warehouse stores benefit from durable demand, offering quality merchandise at low prices, which appeals to consumers in various economic conditions [3] - The company charges annual membership fees, resulting in a high membership renewal rate of 92.2% in Q1 2026, with total paid memberships increasing by 5.2% year over year to 81.4 million [4] - Costco's scale provides it with significant bargaining power with suppliers, leading to lower merchandise costs and benefiting consumers [5] Future Outlook - Management plans to achieve a yearly run rate of 30 net new store openings, indicating ongoing expansion potential despite the company's size [4] - The company is expected to remain relevant and thriving over the next 30 years due to its competitive position and scale advantages [5] Investment Considerations - Despite being 14% below its peak, Costco's stock is not considered a bargain, trading at a price-to-earnings ratio of 49.5, which is viewed as too high [6] - Investors are advised to wait for a price pullback before considering an investment in Costco, as the current valuation may limit potential market-beating returns over the next five to ten years [6] - The company's mature status and high starting valuation may discourage some investors [7]

Core Insights - Costco's sales are experiencing significant growth, with net sales increasing by 8.5% year over year to $29.86 billion for the five weeks ending January 4 [2] - The company's stock price rose over 3% following the release of its December sales figures, reflecting positive market sentiment [1] Sales Performance - Comparable sales in the U.S. grew by 6.3%, while companywide comparable sales increased by 6.2%, excluding the effects of gasoline price fluctuations and foreign exchange rates [2] - Digitally enabled sales surged by 18.3%, indicating strong performance in Costco's online retail segment [4] Market Position - Costco's strategy of offering quality merchandise at low prices is resonating well with consumers, particularly in a cash-strapped environment [4] - The company's large scale allows it to provide a curated selection of goods at competitive prices, making it difficult for rivals to match [4] Customer Loyalty and Growth Strategy - The savings provided by Costco help build loyalty among its members, driving repeat traffic and stable profits [5] - Expansion of store count, along with growing sales at existing locations, is expected to continue fueling Costco's earnings growth in the future [5]

Core Insights - Costco is the third-largest retailer globally by revenue, with nearly one-third of U.S. consumers shopping there [1][2] Membership Structure - Costco offers two membership tiers: the Gold Star Membership at $65 plus taxes per year and the Executive Membership at $130 plus taxes per year, which includes additional benefits such as 2% cashback and service discounts [1] Cost Savings - Shopping at Costco can lead to significant savings on groceries, with examples showing chicken thighs are 44.3% cheaper, Kellogg's Frosted Flakes are 39.3% cheaper, and pork chops are 25.7% cheaper compared to competitors [2] - A comparison indicated that consumers could save over $1,000 annually by shopping at Costco for groceries alone, excluding other categories like gas and electronics [2] Product Recommendations - Costco offers under-the-radar items that can provide additional savings, such as generic allergy medication, protein powder, and larger purchases like appliances [3] - The in-house brand allergy medication, Kirkland Aller-tec, can save consumers up to 90% compared to name-brand alternatives, providing a one-year supply [4]

Core Insights - Costco has started selling 1-ounce gold bars, with prices for the PAMP Suisse and Rand Refinery bars at $1,979.99 and $1,949.99 respectively in late 2023, indicating strong initial demand [2] - By December 2025, the price of the PAMP Suisse bar surged to $4,119.99, reflecting a 108% increase, while the broader gold market rose approximately 65% during the same period [3] - The demand for gold remains robust, with Costco implementing purchase restrictions of one transaction per membership and a maximum of four units per 24 hours [4] Industry Trends - Gold is increasingly viewed as a means to preserve purchasing power and a safe haven during economic and geopolitical uncertainties, leading to heightened investor interest [5] - Current market conditions, characterized by tariff uncertainties and rising deficits, have contributed to gold's status as a strong investment option [6] - Experts, including Ray Dalio, emphasize the importance of gold in investment portfolios, especially during turbulent times, with gold prices peaking at $4,371.78 per ounce in October [7]

Core Viewpoint - Costco has experienced a disappointing year in 2025, with its stock price down 6% despite strong operational performance [1] Group 1: Same-Store Sales Performance - Costco's same-store sales (SSS) have shown impressive growth, indicating strong productivity at existing locations [4] - In fiscal 2020, during the COVID-19 pandemic, Costco reported positive SSS of 7.7%, followed by 16% in fiscal 2021 and 14.4% in fiscal 2022, with the positive trend continuing [5] - The company is expected to maintain its SSS growth in 2026, driven by increased foot traffic and higher average ticket sizes [6] Group 2: Growth Strategy - Costco currently operates 921 warehouses, with approximately two-thirds located in the U.S., and plans to open 28 net new warehouses in fiscal 2026 [6] - There are significant opportunities for expansion in the U.S. and international markets, particularly in China, which is promising for revenue growth in 2026 and beyond [7] Group 3: Valuation Considerations - Despite a strong operational performance in 2025, with net sales and net income increasing by 8% and 10% year over year, the stock has faced valuation concerns [8] - The current price-to-earnings ratio stands at 46, down from 63 earlier in 2025, indicating a potentially better valuation setup for investors [9]

Core Insights - Costco's stock has struggled in 2025, but a positive quarterly result could lead to a turnaround [1] - The company is expected to report strong fiscal first-quarter earnings, driven by its membership model [1] Financial Performance - Q1 EPS is projected at $4.26, an 11.5% year-over-year increase, with total revenues anticipated at $67.3 billion, up 8.3% from the previous year [2] - Preliminary sales data indicates Q1 net sales of $65.98 billion, reflecting an 8.2% rise [2] Competitive Positioning - Costco's membership-based model and bulk sales strategy differentiate it from traditional competitors [3] - Comparable sales rose 6.4%, with U.S. gains of 5.9%, Canada at 6.5%, and Other International markets at 8.8% [3] E-commerce Growth - E-commerce sales are a key growth driver, with digitally enabled comparable sales surging over 20% in the quarter [4] - This follows a 15.6% growth in Q4 FY25, supported by investments in logistics and targeted online promotions [4] Membership Trends - Global membership renewal rates remain above 90%, with membership fee income expected to rise by 9% in FY26 [6] - Online sign-ups are attracting younger demographics, enhancing higher-margin revenue [6] Consumer Behavior - Consumer spending is shifting towards value and essentials, favoring Costco's bulk model [7] - There is a noted decline in non-essential spending, such as apparel, reflecting broader economic caution [8] Market Outlook - Costco's premium positioning and high renewal rates suggest potential outperformance during the holiday season [8] - The stock has a Zacks Rank 3 (Hold), indicating steady expectations despite stretched valuations [10] - Investors are keenly awaiting results for signs of sustained momentum and growth strategies [11]

Core Viewpoint - Costco's recent stock performance has lagged behind the broader market, but a deeper analysis reveals that it has outperformed over the long term [1]. Short-Term Performance - An investment of $10,000 in Costco stock six months ago would have decreased to $8,769, reflecting a total return of negative-12.3% and an annualized return of negative-22.8% [2]. - In contrast, a similar investment in the S&P 500 index would have grown to $11,480, while the Nasdaq-100 index would have reached $11,820 [3]. Long-Term Performance - Over a three-year period, Costco investors have outperformed the S&P 500, although keeping pace with the Nasdaq-100 during the AI boom has been more challenging [5]. - If the investment in Costco stock was held for five years, it would have outperformed both the S&P 500 and the Nasdaq-100 [8]. Valuation and Economic Environment - Costco's stock was trading at a high valuation of 95 times free cash flow (FCF) in spring 2025, but has since decreased to a multiple of 50, which is still considered high for value investors [10]. - The company faces challenges from increasing operating costs due to tariffs and inflation, impacting its low-margin warehouse retail model [11]. Financial Performance and Investor Sentiment - Despite the stock's price dip, Costco's financial results are strong, with trailing-12-month sales up 19% compared to three years ago and FCF nearly tripling [13]. - Supporters of Costco view the current price dip as a buying opportunity, emphasizing the company's resilience in various economic conditions [14].