Costco Wholesale Corp. (NASDAQ: COST) delivered another strong month. The warehouse club said September net sales rose 13% to $30.02 billion. That’s up from $26.58 billion in the same five-week period last year.
Comparable sales, excluding gasoline and currency effects, grew about 7.5% companywide. U.S. comparable sales rose 12.5%, or 8% on an adjusted basis. Digitally enabled sales jumped 19%.
The pattern looks familiar. On September 24, Costco reported fiscal fourth-quarter 2026 results. Quarterly sales climbed 11%, and full-year sales topped $297 billion. Higher gasoline prices helped then, and they helped again in September.
None of this is bad news. Yet COST stock closed at $947.92 on October 8. That’s still below its 200-day moving average near $963. It’s also about 14% under its May high of roughly $1,097.
So why isn’t a 13% sales gain doing more for the stock? The answer comes down to valuation and expectations. Costco has always been expensive. The question now is whether investors still believe its growth justifies the price.
Gas Is Doing the Heavy Lifting, but the Core Is Healthy
Gasoline was the biggest swing factor. Gas price inflation added about 3.8 percentage points to companywide comparable sales. The average selling price per gallon rose 32.8% from a year ago.
That flatters the headline number. But it doesn’t erase what’s underneath. Shopping frequency rose 4.7% worldwide and 4.3% in the U.S. The average transaction grew 2.8% with gas and currency stripped out.
In other words, more members are showing up, and they’re spending a bit more per trip. Nonfood sales grew by a high-single-digit percentage, led by gift cards, housewares and sporting goods. Fresh food rose by a mid- to high-single-digit percentage.
There is one caveat. A Labor Day timing shift added slightly more than half a point to September comps. October won’t have that tailwind.
Expensive, but Not by Costco’s Standards
The bigger concern for investors is valuation. COST trades at a forward price-to-earnings (P/E) ratio of around 41x. That’s the kind of multiple usually reserved for technology stocks.
But that comparison is a bit misleading. Costco’s current multiple sits about 10% below its own historical average. The stock is expensive relative to the broader market and to the retail sector. It isn’t expensive relative to itself.
Investors have always paid a premium for Costco. They pay for consistency, a loyal membership base, and a model that rarely disappoints. That premium hasn’t disappeared. It has simply shrunk.
What’s Changed Is Expectations
So what’s behind the smaller premium? In my view, it’s expectations. Investors appear to be pricing in slower growth.
Costco shoppers sit firmly on the upper leg of the K-shaped economy. Higher-income households have kept spending while others pull back. On paper, that’s a tailwind for Costco.
But there’s a wrinkle. Walmart (NASDAQ: WMT) and Dollar General (NYSE: DG) have both reported more traffic from higher-income shoppers, including for discretionary purchases. That’s spending that could otherwise land in a Costco cart.
To be clear, there’s no sign of that shift in Costco’s recent results. Member visits are still rising. But investors don’t want to be caught in a “gradually, then suddenly” trade. At 41x forward earnings, even a hint of share loss can matter.
Tariffs and the Membership Cushion
Costco is also stuck in the middle of trade policy. Tariff talks in Washington show no sign of resolving anytime soon. That leaves Costco managing cost uncertainty on imported goods. And a brand built on low prices has limited room to raise them.
The membership model softens much of this risk. Members pay an annual fee before they buy anything. Once that fee is paid, they have every reason to keep shopping there. That creates a floor under traffic that most retailers don’t have.
Costco investors know this. It’s a big reason the stock rarely trades at a discount, even in uncertain markets.
Analysts Are Bullish, but Not Chasing
Wall Street remains generally positive on COST. The consensus rating is a Moderate Buy. The average price target sits near $1,058, a little more than 10% above the October 8 close.
That’s a modest gap for a stock analysts like. And they don’t seem eager to push targets much higher. The current macro backdrop likely means interest rates stay elevated. It also leaves Costco with very little pricing flexibility. Neither condition argues for a richer multiple.
The chart tells a similar story. COST bounced from a late-September low near $885, and the MACD has crossed above its signal line. But the stock is now pressing against its 200-day moving average around $963. That line has capped most rallies since June. A decisive close above it would be a meaningful technical win.
The Wildcard: A Stock Split
One possible catalyst is a stock split. Management hasn’t signaled any plans for one. But that calculus could change if the holiday season disappoints.
There are plenty of ways that could happen. An escalation with Iran, a lame-duck Congress, or broader pressure on equities could all weigh on spending and sentiment.
Costco has split its stock several times, but not since a 2-for-1 split in January 2000. That’s more than 25 years. A split wouldn’t change the company’s value. But it would lower the price of a single share. For retail investors, that works a lot like a price cut.
Is COST Stock a Buy After Strong September Sales?
Costco’s September numbers confirm the business is healthy. Gas is inflating the headline, but traffic and core spending are growing too.
The stock’s challenge isn’t the business. It’s how much investors are willing to pay for it. Until the growth outlook clears up, COST may stay range-bound near its consensus target. A strong holiday season, or a surprise split, could change that.
