Costco Reports 8.3% Sales Growth, $4.34 EPS Beat, and 81M Members
Costco posted quarterly EPS of $4.34, beating consensus by $0.07, on $67.31B revenue, up 8.3% year-over-year, and declared a $1.30 dividend per share ($5.20 annualized). Membership fees climbed to $5.3B with renewals near 90% and paid memberships at 81M, while comparable sales rose 5.7%.
1. Surge and Split Potential in 2026
After shares have declined nearly 20% from their February 2025 peak, Costco is positioning itself for a potential resurgence and a 10-for-1 stock split in 2026. Management has not officially announced a split, but analysts point to the $867 per‐share trading level as a barrier to smaller investors, noting that an $1,000 threshold could prompt consideration of a split to improve accessibility. With the availability of fractional shares growing, any decision to split would hinge more on investor convenience and psychological thresholds than on liquidity constraints.
2. Membership and Traffic Growth Underscore Loyalty
Costco’s membership revenue reached $5.3 billion in fiscal 2025, up double digits year‐over‐year, driven by 81 million paid memberships and renewal rates near 90% globally. Comparable‐store traffic rose by 5.7% in the fourth quarter, while digital engagement expanded at a double‐digit pace, reflecting strong member loyalty. These gains highlight the resiliency of the high‐margin membership model, which now represents a disproportionate share of operating profit even as retail margins remain subdued.
3. Institutional and Insider Transactions Signal Sentiment
During the third quarter, IMS Investment Management trimmed its position by 28.3%, selling 2,053 shares and ending the period with 5,194 shares valued at approximately $4.8 million. Simultaneously, Annex Advisory boosted its stake by 8.0%, acquiring 2,841 shares to hold 38,395 shares worth $35.5 million. Insider selling continued, with executives divesting 6,339 shares valued at $5.9 million over the past 90 days, representing a 0.10% insider ownership—data that investors should weigh against the broader institutional ownership of 68.5%.
4. Fiscal 2025 Performance and 2026 Outlook
In its fiscal year ended August 31, 2025, Costco reported net sales growth of 8%, with first‐quarter fiscal 2026 revenues also up just over 8% year‐over‐year. Earnings per share of $4.34 in the December quarter exceeded consensus by $0.07, while revenue of $67.31 billion topped forecasts by $280 million. The company maintained a return on equity of 29.35% and a net margin of 2.96%. Analysts project full‐year EPS of approximately $18.03, supporting a premium valuation at 46.7 times trailing earnings versus 39.1 times for its nearest competitor.