Core Viewpoint - Costco's stock has risen approximately 15% this year, trading near $1,000, raising questions about whether the stock is undervalued or if its recent rise complicates investment decisions [1] Sales Performance - In January, Costco's net sales increased by 9.3% year over year to $21.3 billion, with net sales for the first 22 weeks of the fiscal year rising 8.5% to $123.2 billion [4] - Comparable sales for January were reported at 7.1%, with a 6.4% increase when excluding gasoline prices and foreign exchange effects [5] - Digitally enabled comparable sales surged by 34.4% in January, or 33.1% when adjusted for gas and foreign exchange, compared to 18.3% growth in December [6] Financial Metrics - For the fiscal first quarter ending November 23, 2025, net sales rose 8.2% year over year to $66.0 billion, while membership fees grew at a rate of 14% [7] - Adjusted comparable sales for the quarter were 6.4% overall and 20.5% for digitally enabled sales [7] Market Position and Valuation - Costco's e-commerce growth is significantly outpacing its core warehouse sales, indicating strong positioning against competitors like Amazon [8] - The stock trades at approximately 53 times earnings, reflecting expectations of exceptional growth without any slowdown [10] - A price around $830 per share is suggested as a more favorable entry point compared to the current price near $1,000, as the current valuation leaves little room for error [10]

Group 1: Company Performance - Costco Wholesale reported net sales of $66 billion in the first quarter of fiscal 2026, ending November 23, indicating strong performance in the global retail sector [1] - The company's shares have generated a total return of 193% over the past five years, significantly boosting investor portfolios [1] - Costco has a market capitalization of $443 billion, with a current price of $1018.04 and a price-to-earnings ratio of 52, suggesting a high valuation [4][5] Group 2: Business Model and Growth - Costco's large scale provides cost leadership, allowing it to leverage bargaining power over suppliers, which contributes to its ability to offer everyday low prices to its 81 million membership households [3] - The company continues to expand by opening 25 to 30 new warehouses each year, indicating ongoing revenue and profit growth potential [3] Group 3: Investment Considerations - While Costco is recognized as a high-quality business, the current price-to-earnings ratio suggests that it may not be the best time to invest, as it indicates an expensive entry point with little margin of safety for new investors [5] - Investors are advised to be patient and wait for a more favorable opportunity to invest in Costco [6]

Core Viewpoint - Costco Wholesale is committed to rewarding shareholders through significant dividend increases and share buybacks, indicating a strong financial position and shareholder-friendly policies [1][2]. Shareholder Rewards - Since 2004, Costco has raised its dividend by 1,200%, significantly surpassing the 75% inflation rate during the same period [1]. - The company has spent $12.5 billion on share buybacks since 2000, with $903 million allocated in the last fiscal year, which enhances earnings per share by reducing the share count [1]. Special Dividends - Costco has a history of paying special dividends, with five such payouts since 2013, which are characterized by their unpredictability and substantial amounts [2][3]. - The most recent special dividend in January 2024 was $15 per share, which was 1,370% larger than the regular dividend, providing a one-time yield of 2.4% for shareholders who purchased shares before the announcement [3]. - Previous special dividends have also been significantly larger than regular dividends, with increases of 1,328% in 2020, 1,300% in 2017, and 1,308% in 2015 [4]. Market Reaction - Following the announcement of the 2023 special dividend, Costco shares rallied by 8% in the five trading sessions, reflecting investor enthusiasm for the payout [6]. - Special dividends are typically announced during periods of strong financial performance, as seen with net sales growth of 17% year over year before the 2020 special dividend and 15.2% year over year before the 2023 special dividend [7].

Core Viewpoint - Costco's stock has risen 15% since the beginning of the year despite a decline over the last 12 months, indicating a potential recovery in investor sentiment [1][2]. Group 1: Stock Performance - Costco's stock price increased by 1.16% today, reaching $1,000.76, with a market capitalization of $444 billion [5][6]. - The stock has a 52-week range of $844.06 to $1,078.23, reflecting significant volatility [6]. Group 2: Financial Performance - In the first quarter of fiscal 2026, Costco's revenue rose by 6%, and net income surged by 11% to $2.0 billion, closely aligning with fiscal 2025 results where revenue increased by 8% and profit was $8.1 billion, 10% higher than the previous year [6]. - Costco maintains a gross margin of 12.88% and a dividend yield of 0.64% [6]. Group 3: Competitive Position - Costco enjoys a high membership renewal rate of around 92%, indicating strong customer loyalty [4]. - The company has successfully expanded internationally, particularly in Europe and Asia, where competitors like Walmart have struggled [7]. Group 4: Valuation Concerns - Costco's current P/E ratio stands at 52, significantly higher than that of Walmart, Target, and Amazon, raising concerns about its valuation relative to profit growth [8]. - Berkshire Hathaway closed its Costco position in 2020 due to valuation concerns, although Warren Buffett later acknowledged it might have been a mistake [10]. Group 5: Investment Outlook - While Costco is considered a high-quality company with a strong growth trajectory, the current stock price may not justify additional investments until its earnings multiple aligns more closely with peers [12].

Core Viewpoint - Costco's stock has significantly outperformed the market in 2026, with a year-to-date increase of approximately 15%, reflecting investor confidence in its consistent growth capabilities in various market conditions [3][4]. Sales Performance - Costco reported a 9.3% year-over-year increase in sales for January, driven by a 7.1% rise in same-store sales, which excludes the effects of gasoline prices and foreign exchange fluctuations [6]. - Adjusted same-store sales growth accelerated to 6.4% year-over-year, up from 6.2% in December, indicating robust sales momentum despite potential weather-related impacts [7]. - Digitally enabled sales, which account for 10% of overall revenue, surged by 33.1% year-over-year in January, a significant increase from 18.3% growth in December, showcasing the effectiveness of Costco's digital engagement strategies [8][9]. Historical Sales Growth - Sales growth has remained strong over the past few years, with fiscal year sales increasing by 7%, 5%, and 8% in 2023, 2024, and 2025, respectively, despite challenging comparisons to the high growth rates during the COVID-19 pandemic [10]. Valuation Concerns - Despite Costco's strong business performance, concerns about its current valuation arise, with a price-to-earnings ratio of 53, which implies expectations of 15% annual earnings-per-share growth, while actual growth was only 10% in fiscal 2025 [11][12][13]. - The high valuation presents a risk of potential re-rating, suggesting that even a well-performing business can face valuation risks if the stock price is deemed excessive [12].

Core Viewpoint - A proposed class action lawsuit has been filed against Costco, alleging false advertising regarding its rotisserie chicken, which is claimed to contain preservatives despite being marketed as having "no preservatives" [1][2]. Group 1: Lawsuit Details - The lawsuit was filed on January 22 in the U.S. District Court for the Southern District of California, accusing Costco of misleading customers and potentially cheating them out of tens to hundreds of millions of dollars [1][2]. - The complaint includes allegations of violations of multiple consumer protection laws in California and Washington state, where Costco is headquartered [3]. - The lawsuit was initiated by two women from California, highlighting the issue of misleading advertising practices [3]. Group 2: Company Response - Costco has responded by stating that it has removed the misleading signage regarding preservatives from its stores and online presentations [4]. - The company clarified that carrageenan and sodium phosphate are used in their rotisserie chicken to maintain moisture retention, texture, and product consistency, and both ingredients are approved by food safety authorities [4]. Group 3: Advertising Claims - The lawsuit cites a specific in-store advertisement claiming that the Kirkland Signature Seasoned Rotisserie Chicken contains no preservatives, artificial flavors, colors, MSG, or gluten [5]. - The complaint alleges that sodium phosphate and carrageenan, both preservatives, are included in the product, contradicting the advertising claims [6]. - It is noted that the preservatives are listed on the packaging in smaller print, which the lawsuit argues is misleading [7]. Group 4: Legal Allegations - In addition to false advertising, the lawsuit accuses Costco of violating unfair competition laws by engaging in deceptive business practices that misled consumers into paying a premium for the rotisserie chicken [8].

Core Insights - Costco Wholesale Corporation's strong balance sheet and liquidity position provide resilience against challenging retail conditions [1][5] - The company's disciplined debt management and low leverage enhance its defensive profile [2] - Membership fee income growth and a loyal customer base contribute to stable cash flow [4] Financial Position - As of Q1 FY26, Costco reported $17.2 billion in liquid assets, including $16.2 billion in cash and cash equivalents and $966 million in short-term investments [1][8] - Current liabilities stood at $41.8 billion, while current assets were $43.4 billion, indicating a balanced working capital position [2] - Long-term debt was $5.7 billion, with shareholders' equity at $30.3 billion, reflecting limited leverage [2] Cash Flow and Capital Expenditures - In the latest quarter, Costco generated $4.7 billion in cash from operations, covering $1.5 billion in capital expenditures [3] - Projected full-year capital spending is around $6.5 billion, supporting growth initiatives including 28 new warehouse openings planned for FY26 [3] Membership and Revenue Growth - Membership fee income increased by 14% year-over-year to $1.3 billion, driven by a 5.2% rise in total paid memberships to 81.4 million [4][8] - The company maintains a high renewal rate of 89.7%, ensuring predictable cash flow [4] Market Performance and Valuation - Costco's shares have increased by 1.3% over the past year, compared to the industry's growth of 9.9% [6] - The forward price-to-earnings (P/E) ratio is 46.90, higher than the industry average of 31.82, indicating a premium valuation [9] - Consensus estimates suggest year-over-year sales growth of 7.6% and earnings growth of 11.7% for the current financial year [10]

Core Viewpoint - Costco's stock has shown strong long-term performance, with a total return of 52% over the 12 months leading to February 2025, but currently trades 11% below its all-time high, prompting investor interest in potential gains [1] Stock Performance and Projections - For Costco's stock to reach $1,000 by the end of 2026, it would need to increase by just 5% from its current price of $954, which is achievable given its historical compound annual growth rate of 20% over the past decade [2] - Sell-side analysts have set a consensus price target of $1,033 for Costco, indicating an 8% upside potential based on its long-term performance [3] Financial Performance - Costco reported a 7% increase in same-store sales (SSS) for December 2025, following a 5.9% increase in fiscal 2025 and a 5.3% increase in fiscal 2024, highlighting strong fundamental gains [3] - Wall Street analysts forecast revenue and earnings per share to grow by 8% and 11%, respectively, between fiscal 2025 and fiscal 2026, reflecting a stable outlook for the company [8] Membership and Customer Retention - Costco has 81.4 million membership accounts, a 5.2% increase from the previous year, indicating strong customer retention and attraction [4] Market Position and Valuation - Costco's stock trades at a high price-to-earnings (P/E) ratio of 51, reflecting the market's premium valuation of the company due to its strong brand recognition and cost advantages in the retail sector [9] - Despite facing competition and the rise of online shopping, Costco continues to perform well, supported by its expanding store base [9] Economic Considerations - While external factors such as a potential recession could impact consumer spending and foot traffic, the current economic environment, including the Federal Reserve's rate-cutting cycle and quantitative easing, is seen as a stimulus for growth [6][7]

Core Viewpoint - Costco Wholesale Corporation (NASDAQ:COST) is recognized as a strong investment opportunity, particularly after a recent stock pullback, which Mizuho believes is overdone [2]. Group 1: Stock Performance and Analyst Insights - Costco shares experienced a decline of approximately 6% in 2025, while the S&P 500 index increased by over 16% [3]. - Mizuho upgraded Costco's stock rating from Neutral to Outperform and raised the price target from $950 to $1,000 [2]. - Analyst David Bellinger noted that the recent stock correction of about 20% is linked to concerns over slowing membership and comparable sales growth, which he argues are temporary issues [3]. Group 2: Membership and Growth Analysis - Bellinger provided a proprietary store-level analysis indicating that around half of recent U.S. warehouse openings are 'fill-ins,' which are affecting membership growth by drawing demand from high-volume locations [3]. - The rate of premium member additions in Q1 is 2-3 times higher than total membership growth, indicating a positive trend in trade-up activity [3]. - Domestic renewal rates for memberships remain exceptionally high, exceeding 90% and above the 10-year running average [3]. Group 3: Future Catalysts - Current investor concerns are attributed to an excess of consumer demand, which may stabilize as Costco normalizes wage growth after a period of strong increases [3]. - There is potential for a special dividend, which could serve as a catalyst for future stock performance [3].

Core Insights - Costco's December comparable sales rose 7%, with adjusted comparable sales at 6.2%, indicating a slight deceleration from November's 6.4% [1][2] - U.S. adjusted comparable sales increased to 6.3% in December, up from 5.8% in November, suggesting a potential reacceleration in consumer shopping habits [2][5] - Net sales for December reached approximately $29.9 billion, an 8.5% increase year-over-year, surpassing November's 8.1% growth [3][8] Sales Metrics - The company's digitally enabled comparable sales rose 18.3% in December, up from 16.3% in November, indicating strong momentum in e-commerce [7] - Membership fee income increased by 14% year-over-year to $1.33 billion, contributing to overall profit growth [8] Business Model and Valuation - Costco's business model relies on membership fees and low prices, fostering customer loyalty and repeat visits [9] - Despite strong sales growth, Costco's stock is considered overpriced with a price-to-earnings ratio of 49, raising concerns about future valuation sustainability [11][12] - The December sales report reinforces confidence for current shareholders, but the high valuation presents a risk for new investors [12]