Costco Beats Q4 Estimates on Strong Sales; Focus Shifts to Special Dividend

Costco Wholesale Corp. (COST) reported fourth-quarter earnings and revenue that surpassed analyst expectations, driven by robust comparable sales growth and strong performance in its digital channels. The results for the period ending in fiscal year 2026 helped alleviate concerns about slowing consumer demand, though questions about the company's high valuation remain.

A Strong Finish to the Fiscal Year

Costco announced strong results for its fiscal fourth quarter, providing a solid conclusion to its 2026 fiscal year. The retailer's performance exceeded consensus estimates on both the top and bottom lines.

• Earnings Per Share (EPS): $6.75 vs. an estimated $6.55
• Revenue: $95.70 billion vs. an estimated $94.85 billion
• Enterprise Comparable Sales: +9.4%, beating the consensus forecast of 8.4%
• U.S. Comparable Sales: +7.2%, also ahead of the ~6.5% expectation

For the full fiscal year 2026, Costco posted revenue of $303.15 billion and an EPS of $20.76, according to the report.

Membership and Digital Growth in Focus

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Beyond the headline figures, the report addressed key investor questions. The 9.4% rise in enterprise-wide comparable sales confirmed the health of consumer demand. Digital sales also showed significant momentum, with digitally-enabled sales reportedly climbing 17.9% year-over-year in August, highlighting the success of partnerships with services like Instacart and Uber Eats.

CFO Gary Millerchip addressed concerns about membership, stating that renewal rates are normalizing rather than deteriorating, with net new sign-ups continuing to grow at a steady pace. This commentary provided reassurance against fears of a potential slowdown in the company's core membership-driven business model.

Valuation and Future Catalysts

Despite the strong operational performance, some analysts remain cautious due to Costco's premium valuation, with its stock trading at a price-to-earnings ratio of over 46x. JPMorgan trimmed its price target to $1,015, citing potential investor rotation into other sectors, while Truist lowered its target to $955 on concerns about a potential ceiling for member growth.

Investors are now looking ahead to potential catalysts, chief among them a widely anticipated special dividend. Based on the company's history and its estimated $13 billion net cash surplus, analysts are modeling a potential payout of around $20 per share in late 2026. Other long-term growth drivers include a strategic expansion into Asian markets and a continued focus on increasing the penetration of higher-spending Executive memberships.