Costco Earnings: High Valuation and Bearish Trend Set Challenging Stage for Report

Costco (COST) is scheduled to release its fiscal fourth-quarter earnings on September 24 after the market closes, with investors closely watching whether the retail giant can justify its premium valuation. The stock enters the report amid a well-established bearish trend and a historical pattern of selling off even after meeting expectations.

Wall Street Expectations

Analysts have set a high bar for the warehouse club, with consensus estimates pointing to significant year-over-year growth. Key figures to watch include:

• Earnings Per Share (EPS): Consensus expects $6.55, which would represent an 11.6% increase from the $5.87 reported in the same quarter last year.
• Revenue: Forecasts range from approximately $94.85 billion to $95.49 billion.

An interesting divergence has emerged in recent estimate revisions, according to data from Investing.com. While revenue forecasts have edged slightly higher over the past 30 days, EPS estimates have drifted marginally lower, suggesting some analyst skepticism about the company's ability to protect profit margins despite strong sales volumes.

The Valuation Challenge

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Costco's primary hurdle is its rich valuation, with the stock trading at a trailing price-to-earnings (P/E) multiple of 45.1x. This premium valuation means that strong performance is already priced in, leaving little room for error. The company has a history of its stock price falling after earnings reports, a pattern often referred to as a "sell the news" reaction.

Data shows that even a slight miss on EPS has historically led to a significant stock decline, while modest earnings beats have often failed to produce a positive reaction. To spark a meaningful rally, Costco will likely need to deliver a substantial upside surprise, similar to its more than 5% beat in the first quarter of its 2026 fiscal year.

Technical Backdrop and Key Levels

The technical picture signals caution heading into the report. As of September 23, major indicators on both daily and weekly charts, including the MACD and ADX, were in firmly bearish territory, indicating a strong, established downtrend with deteriorating momentum.

Investors will be monitoring key price levels following the announcement. The first line of technical support in a bearish scenario is seen around $895.70. On a bullish reaction, the stock would need to overcome initial resistance near $915.52.