Costco Wholesale Corporation reported fiscal second-quarter earnings that surpassed market expectations. The company has encountered no difficulties in increasing and retaining its membership base and is anticipated to benefit this year from tax refunds and potential tariff reimbursements. Following the release of these results, numerous major financial institutions issued positive ratings on the stock.
The financial report revealed that for the second quarter of fiscal year 2026, ended February 15, Costco's revenue grew 9.2% year-over-year to $69.6 billion, exceeding market expectations by $280 million. Membership fee income reached $1.36 billion, also surpassing forecasts. Overall comparable store sales increased by 7.4%—comprising a 4.2% rise in average transaction value and a 3.1% increase in traffic—which was higher than the anticipated 6.7% growth. In the United States, comparable store sales grew 5.9%, exceeding the expected 5.7%.
Regarding profitability, operating profit was $2.61 billion, a 12.5% increase from the prior year. Adjusted earnings per share came in at $4.58, three cents above the average estimate. Costco stated that its large package sizes and unique product selection have attracted value-conscious consumers—particularly those with higher disposable incomes—enabling it to gain market share. The retailer has also expanded its e-commerce and delivery services and introduced exclusive shopping hours for its Executive members.
Bank of America reiterated its "Buy" rating on Costco. Analyst Christopher Nardone commented that the retailer's ongoing practice of reinvesting profits into lower merchandise prices strengthens confidence in its ability to continue gaining market share across various product categories. He also noted that growth in Executive Membership numbers and stabilizing renewal rates are positive factors. Furthermore, Nardone suggested that Costco possesses some resilience against rising fuel prices, stating that while a sharp increase in gasoline prices might compress fuel margins in the short term, sustained higher oil prices could drive more customers to its stores due to its competitive pricing, especially as approximately half of its members typically visit both the gas station and the warehouse.
Jefferies also maintained its "Buy" rating on Costco. Analyst Coret Tarlowe emphasized that core profit margins improved despite pressure from sales, general, and administrative expenses related to product mix and claims reserves. Looking ahead, Tarlowe identified store expansion, capital expenditure investments, and pricing discipline as the foundation for continued market share gains.
Morgan Stanley maintained its "Overweight" rating on Costco with a $1,130 price target. Analyst Simeon Gutman pointed to the company's strong execution in membership growth, membership fee revenue, and core profitability, alongside an acceleration in comparable sales growth heading into the spring. He stated that these results underscore Costco's structural advantages, including supply chain efficiency, value pricing, and scale, which are expected to support further market share expansion and drive long-term profit growth.
Additionally, an analyst from the iREIT+Hoya Capital investment team noted that Costco delivered another strong quarterly report with robust growth in both revenue and profit, largely driven by strong performance in Canada and international markets. Looking forward, Costco is expected to maintain solid growth momentum fueled by store expansion, particularly in international markets. With only 924 warehouse clubs currently in operation, the company has a long growth runway ahead. However, while the stock deserves a valuation premium, its forward P/E ratio of 48 times may lead to potential underperformance if expectations are not met. Amid rising macroeconomic uncertainty, the stock could benefit from its defensive characteristics. The analyst also mentioned they would not be surprised by an announcement of a stock split in the medium term.
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