2026-09-25

Costco Crushes Q4 Estimates on Every Metric - So Why Did the Stock Barely Move?

Written & reviewed by the TradeSmrt editorial team · 2026-09-25

In this article

What Happened
Why a Clean Beat Didn't Move the Stock
What to Take Away From This
FAQ
Sources

What Happened

Costco reported fiscal fourth-quarter 2026 results after Thursday's close (the 16-week period ended August 30) that beat Wall Street on virtually every line item. Net sales rose 11.2% year over year to $93.9 billion, and total revenue - which includes membership fees - hit $95.7 billion, ahead of the roughly $94.85 billion analysts had modeled. Earnings per share came in at $6.75, comfortably above the consensus estimate of roughly $6.48 to $6.55 and up 15% from $5.87 a year earlier. Net income jumped to just under $3 billion from $2.61 billion in the same quarter last year. For the full fiscal year, net sales climbed 10.1% to $297.2 billion, and annual net income rose to $9.226 billion ($20.76 per share) from $8.099 billion ($18.21 per share) the year before.

The underlying detail was arguably even stronger than the headline. Comparable sales rose 9.4% company-wide, led by a 10.7% gain in the U.S., with Canada up 5% and other international markets up 7%. Digital (e-commerce) comparable sales surged roughly 19.5% to 20%, pushing full-year digital sales above $33 billion. Membership fee income climbed 7.3% to $1.85 billion from $1.72 billion, still capturing the tailwind from last year's fee increase working its way through the renewal cycle. Every single growth lever - in-store traffic, e-commerce, membership economics, and international expansion - was pointed in the right direction at once.

Yet the stock barely reacted. Shares popped roughly 1% in the immediate after-hours response to the release, only to drift back down to around $889 in Friday premarket trading, essentially flat to slightly lower versus Thursday's close. Costco has spent much of the past year moving sideways to lower, trailing the S&P 500 by roughly 21 percentage points over that stretch, and this across-the-board beat did nothing to break that pattern. Two overlapping factors explain why a genuinely clean quarter produced such a muted market response.

Why a Clean Beat Didn't Move the Stock

The first factor is that a meaningful slice of the EPS surprise wasn't repeatable. Costco disclosed that it received $184 million in tariff refunds this quarter under provisions of the International Emergency Economic Powers Act (IEEPA) - $174 million in principal plus $10 million in interest - and said this represents roughly a third of the total refunds it ultimately expects to receive. After reinvesting a portion of that windfall into member-facing price cuts, the net benefit worked out to $0.15 per diluted share, or about 2.2% of the quarter's $6.75 EPS. In other words, a chunk of the number that blew past consensus came from a non-operating, one-time tax refund rather than a genuine improvement in the core wholesale business - and analysts flagged that distinction almost immediately in their notes.

The second, more structural factor is valuation. Costco trades at a trailing price-to-earnings ratio of roughly 43 to 45 - among the richest multiples anywhere in retail - which effectively means the stock already prices in a pattern of routine, near-flawless execution. Because Costco has topped consensus estimates in nearly every quarter for years, the market has grown somewhat numb to a "clean beat" on its own; what would actually move the needle now is guidance pointing to acceleration, not just another beat. Instead, management noted that comparable sales growth, once stripped of fuel-price and currency effects, was a more modest 6.7%, and suggested that a 6%-to-7% adjusted pace may represent the new normal rather than a springboard to faster growth. For a stock already priced for perfection, "healthy but not accelerating" reads less like good news and more like confirmation that the growth rate isn't about to reaccelerate.

That valuation tension shows up starkly in how far apart Wall Street's price targets have drifted. BMO Capital Markets analyst Kelly Bania set a $1,315 target - implying roughly 47% upside from current levels - anchored on Costco's 89.8% member renewal rate and 42.3 million Executive members. At the other end, at least one quantitative fair-value model puts Costco's intrinsic value closer to $799, implying downside of roughly 10.8%. The sell-side consensus target sits near $1,069, about 19% above the current share price, built on a rating mix of 15 buys, four holds, and one sell - a "Moderate Buy" on paper that masks an unusually wide range of opinion underneath.

What to Take Away From This

Check the quality of an EPS beat, not just the headline number. Costco's $6.75 EPS included $0.15 from a non-recurring tariff refund - about 2.2% of the total. A number that clears consensus doesn't automatically mean the core business improved by that much; read the footnotes for one-time items.
Expensive, "flawless execution" stocks need more than a beat to re-rate higher. At a 43-to-45x P/E, Costco was already priced for consistency. Without guidance signaling acceleration, even a strong quarter can land as a non-event.
Separate headline comp sales from FX- and fuel-adjusted comp sales. This quarter's 9.4% headline figure fell to 6.7% once currency and gas-price effects were stripped out - the adjusted number is the better proxy for genuine organic growth.
A wide analyst price-target range is itself a signal. A spread from $799 to $1,315 means the sell-side has no real consensus on fair value; it's worth understanding what growth and multiple assumptions drive each end before anchoring on the average.
A good company and a good stock aren't always the same thing. Costco's fundamentals were essentially flawless this quarter, but the stock has trailed the S&P 500 by roughly 21 points over the past year - a reminder that capital chasing other themes (AI, semiconductors) can leave even best-in-class operators behind.

FAQ

Costco's earnings looked great - why didn't the stock go up?

Two things happened at once. The market quickly recognized that $0.15 of the $6.75 EPS beat came from a one-time, non-repeating tariff refund rather than core operations. At the same time, with the stock already trading around 43 to 45 times earnings, an ordinary beat wasn't enough to trigger a re-rating - especially after management noted that comparable sales growth, adjusted for currency and fuel, had slowed to 6.7%, suggesting steady rather than accelerating growth.

What exactly is the tariff refund Costco mentioned?

It refers to $184 million ($174 million in principal plus $10 million in interest) that Costco received this quarter under refund provisions tied to tariffs originally imposed under the International Emergency Economic Powers Act (IEEPA). The company said this represents roughly a third of the total refunds it expects to eventually collect, and it reinvested a large portion of the money into member-facing price reductions. The remaining net benefit added $0.15 to this quarter's EPS.

Is Costco stock a buy right now?

This isn't investment advice, and Wall Street itself is sharply divided. BMO Capital Markets has set a $1,315 target (about 47% upside), while at least one quantitative model puts fair value closer to $799 (roughly 10.8% downside). The consensus leans "Moderate Buy" (15 buys, four holds, one sell), but the sheer size of that $799-to-$1,315 range shows how much disagreement exists over how to value a premium-multiple retailer whose growth is normalizing - it's worth examining the assumptions behind each estimate before acting on any single number.

What's the difference between the 9.4% and 6.7% comparable sales figures?

The 9.4% figure is headline comparable-sales growth, which includes the effects of gasoline prices and currency movements. The 6.7% figure strips those two factors out. Rising fuel prices mechanically inflate gas-station revenue, and favorable currency moves can flatter international sales once converted back to dollars, so the adjusted 6.7% figure is the more reliable gauge of Costco's actual growth in traffic and spending per member.

Sources

This article is an original synthesis and analysis based on the reporting below, not a reproduction of the original articles. Please check the source articles directly for the most current figures.

⚠️ This article is for informational purposes only and is not investment advice. Market conditions change constantly - always verify the latest data before making investment decisions.