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Photo courtesy of Yonhap News |
[Alpha Biz= Ellie Kim] Shares of Costco Wholesale are continuing to climb despite concerns over high inflation, as investors highlight the company’s resilient membership-based business model and global expansion as key growth drivers.
Costco’s stock has risen about 19% year-to-date as of May 5, significantly outperforming the S&P 500, which gained 5.84% over the same period.
The retailer operates a tiered membership system—Gold Star ($65 annually) and Executive ($130 annually)—offering discounts across a wide range of categories, including electronics, health supplements, eyewear, and automobiles, with a strong focus on its private-label Kirkland brand. Of its 82.19 million paid members, approximately half (40.4 million) are Executive members. Costco’s membership renewal rate stands at around 90%.
Market analysts say this robust membership structure is underpinning earnings growth. Park Jae-in, an analyst at Hanwha Investment & Securities, noted that Costco’s membership-driven revenue model could help sustain stable performance amid rising geopolitical uncertainties in the Middle East.
For the second quarter of fiscal 2026 (December 2025–February 2026), Costco reported revenue of $69.6 billion, up 9.2% year-on-year. Net income rose 13.8% to $2.035 billion, while earnings per share came in at $4.58, exceeding market expectations of $4.55.
CFO Gary Millerchip acknowledged that prolonged instability in the Middle East could impact fuel costs and shipping schedules but emphasized the company’s commitment to maintaining price stability, particularly through its Kirkland brand.
Wall Street analysts have set target prices in the range of $1,060 to $1,070, above the May 4 closing price of $1,012.79. JPMorgan recently maintained an “overweight” rating on Costco, raising its price target slightly from $1,050 to $1,060.
Despite valuation concerns—Costco’s forward price-to-earnings ratio stands at around 49–50 times as of April—analysts continue to raise targets, citing strong growth potential.
The company’s digital segment is also expanding rapidly. In the second quarter of fiscal 2026, digital comparable sales increased 22% year-on-year, roughly three times the growth rate of offline comparable sales (7%). Costco plans to open 28 new stores during fiscal 2026, further supporting its growth trajectory.
Alphabiz Ellie Kim 인턴기자(press@alphabiz.co.kr)
