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Exclusive News
Will 2026 Mark a Turnaround for Costco?
Authored by Jordan Chussler. Originally Published: 12/3/2025.
Key Takeaways
- Costco has dealt with numerous headwinds this year, including tariffs and souring consumer sentiment, resulting in a year-to-date gain of just 1.34%.
- Despite that, Costco has beat on earnings nine of the last 10 quarters.
- The company could turn a corner in 2026, supported by strong fundamentals, bullish price targets from analysts, and negligible short interest.
2025 has been a mixed bag for consumer staples companies in the retail sector. While Target’s (NYSE: TGT) well-documented struggles have produced a year-to-date (YTD) loss of more than 34%, other retailers have fared much better.
Walmart (NYSE: WMT), for example, has shown an ability to adapt to President Trump’s tariff policies and the resulting shifts in consumer behavior.
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The company—a dividend king, the largest grocer in the United States, and an increasingly significant e-commerce competitor—has posted a YTD gain of nearly 25%.
Membership-only warehouse club Costco Wholesale (NASDAQ: COST) sits somewhere in the middle with a modest 1.34% YTD gain.
Throughout 2025, Costco shareholders have weathered corrections of more than 17%, 12% and 8% at various points.
With the calendar about to turn to 2026, current and prospective investors are hoping for a bounce-back year driven by Costco’s loyal members, solid underlying fundamentals and bullish forecasts from Wall Street analysts.
Costco Has Adapted to Tariffs and Continued to Expand
On Monday, it was reported that Costco is suing the Trump administration and seeking a refund for import taxes the U.S. Court of International Trade in New York and the U.S. Court of Appeals for the Federal Circuit in Washington have deemed “illegal.”
While the litigation may take months to resolve, it underscores the broader challenges the company has faced—and how it has navigated them.
A key response has been expanding Costco’s private-label brand, Kirkland Signature, which celebrated its 30th anniversary in 2025. According to president and CEO Ron Vachris’s fiscal year (FY) 2025 Q4 earnings callcomments, “Kirkland Signature sales penetration continues to increase, bringing even more high-quality value to our members while offsetting potentially inflationary impacts from tariffs.”
That strategy appears to be working. Costco has broadened Kirkland Signature offerings to provide members high-quality alternatives to tariff-impacted goods. CFO Gary Millerchip said those products typically deliver 15% to 20% better value compared with national brands of comparable quality.
In Q4 alone, Costco launched more than 30 new Kirkland Signature items, while ancillary businesses—including the company’s pharmacy, optical and hearing-aid operations—all posted strong quarters. Vachris also noted that Costco’s merchants adjusted plans to mitigate tariff impacts for the warehouse chain.
Those moves helped the company stay on a steady growth path. In FY 2025, Costco opened 27 new warehouses, bringing the total to 914, and plans 35 additional locations in FY 2026 across domestic and international markets.
The company has also increased its e-commerce presence: online sales topped $19.6 billion (a 15% year-over-year increase), while digitally enabled sales surpassed $27 billion for FY 2025.
Costco’s Strong Fundamentals Have Remained Intact
The warehouse club’s core business—selling memberships—maintains an impressively high renewal rate of about 90% in the United States and Canada. That helped Costco beat expectations on both the top and bottom lines when it reported FY 2025 Q4 earnings on Sept. 25—its ninth earnings beat in the last 10 quarters.
However, the stock was punished after the earnings release, sliding more than 6% before finding a bottom on Nov. 24. Since then, COST is up more than 4%, and investors are looking ahead to FY 2026 with renewed interest.
Earnings are expected to grow about 9.21% next year, from $18.03 per share to $19.69. The company reported quarterly revenue rose 8.1% year over year to $86.16 billion; net income increased to $2.61 billion, up more than 11% YOY; and paid memberships reached 81 million, up 6.3% YOY.
That performance reflects disciplined management and healthy financials. From 2022 to 2025, Costco’s net income grew at an annual average rate of 11.15%, while annualized earnings per share (EPS) growth averaged 11.53% over the same period.
Perhaps most notably, the company’s net cash from operating activities rose more than 80% from 2022 to 2025, increasing from $7.39 billion to $13.33 billion.
What Wall Street Thinks of Costco
Of the 32 analysts covering Costco, the consensus is a Moderate Buy: 19 assign a Buy rating, 13 assign a Hold, and none a Sell.
Analysts’ average 12-month price target of $1,027.75 implies roughly 11.47% upside from current levels. While that may not signal explosive upside, it is complemented by a dividend yield of 0.56%, which equates to about $5.20 per share annually at current prices.
Over the past year, institutional ownership(68.48%) has remained solid, with 3,106 buyers outnumbering 2,596 sellers. That has produced inflows of more than $51 billion versus outflows near $27 billion.
At the same time, Wall Street’s skeptics are proceeding cautiously: short interest in Costco currently sits at just 1.63% of the float.
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