Costco (COST) Stock Forecast & Price Target

Costco Wholesale has demonstrated a robust financial performance, highlighted by a steady increase in core gross margins, which rose by 22 basis points, marking the 11th out of the last 12 quarters of improvement. Membership fee income reached $1.36 billion, reflecting a 13.6% increase, surpassing internal targets, while retail gross margin expanded to 11.0%, driven by performance across various product categories, particularly in Food & Sundries and Non-Foods. Additionally, February 2026 saw total traffic increase by 3.0%, with a notable 4.8% rise in average ticket size, showcasing strong consumer demand for value during a period of favorable market conditions.

Costco Wholesale's recent membership renewal rates have shown a downward trend, particularly in the US and Canada, which decreased by 10 basis points sequentially to 92.1%, reflecting challenges associated with online signups that tend to renew at a lower rate. The company's thin profit margins have resulted in occasional misses on earnings expectations, and while sales growth has been consistent, the reliance on low margins creates vulnerability, especially in times of inflationary pressure. Additionally, a slowdown in membership growth could significantly impact the company's earnings before interest and taxes, as membership fees contribute approximately 70% to profits, further exacerbating concerns regarding future revenue stability amidst potential pricing strategies.