Core Viewpoint - Costco's membership-based business model continues to thrive, providing significant value despite low gross margins, with a notable increase in stock price and resilience against market downturns [1][2]. Financial Performance - As of February 2025, Costco's comparable sales grew by 8.3% year-over-year, with e-commerce sales increasing by 20.2% [1]. - The company reported a net income margin of 2.8% for Q2 FY2025, an increase from 2.4% in FY2019, and a strong adjusted EPS growth to $4.02 [3]. - Revenue projections show a compound annual growth rate (CAGR) of 7% from FY2024 to FY2027, with net income expected to grow at 11.5% [4]. Membership and Customer Loyalty - Costco's membership renewal rate stands at 90.5% globally, indicating strong customer loyalty, with a 93% renewal rate in the UCAN region [2]. - The average sales per warehouse are projected to reach $260 million by 2024, reflecting a 3.1% year-over-year increase [2]. Expansion Plans - The company plans to expand its global warehouse count to 897 by March 2025, with 25 new warehouses expected to open in FY2025 [3]. - Costco's strategy includes maintaining low pricing by marking up products only 15%, compared to the supermarket industry's average markup of 25-50% [7][8]. Valuation and Market Position - Despite recent sell-offs, Costco's forward P/E ratio stands at 50.02, significantly higher than the sector median of 16.22, indicating a premium valuation [6]. - The forward PEG ratio of 5.51 suggests that Costco remains expensive compared to its historical averages and industry peers [7]. - The stock price is currently around $900, with a fair value estimate of $691.30, indicating limited upside potential [9].