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Costco shares hit a valuation wall despite strong membership model
Costco reported fiscal Q3 2026 EPS of $4.93 on revenue of $70.527 billion, but its shares trade at about 48 times earnings with only limited upside under a base-case target.
Costco’s stock is being framed as a “good company, harder setup” trade as valuation compresses the margin for error, according to My 24/7 Wall St. The analysis notes Costco earns a buy rating with 90% confidence and sets a price target near $1,022.6, a modest step up from about $952.8 at the time of the write-up. Costco is cited as trading about 2.0% below its 52-week high of $1,094.8 and well off its $840.4 low, despite being up 10.97% year to date.
The bullish case in the piece centers on Costco’s membership machine and recent operating performance. For fiscal Q3 2026, reported May 28, 2026, the outlet says Costco delivered EPS of $4.93 on revenue of $70.527 billion, with revenue up 11.58% year over year and net income up 15.19%. It also highlights comparable sales growth of 9.8%, digital comps up 21.5%, and a worldwide membership renewal rate of 89.7%.
Valuation is presented as the key constraint, with the stock trading at roughly 48 times earnings compared with Walmart’s about 41 times earnings in the article. The piece warns that a trailing P/E of 48 and a PEG of 5 leave little room if results disappoint, and it flags risks cited in Costco’s 10-Q including tariff pressure, foreign-exchange volatility, and rising wages.
On the downside, the analysis sketches a bear scenario that would take Costco to about $942.7, while a bull scenario points to $1,129.7 for an 18.58% total return. It also points to heavy warehouse and distribution capex pressuring near-term free cash flow, despite Costco’s 29.1% return on equity, and notes insider activity has skewed to selling.