UBS: Costco Wholesale Corp — Marching Ahead
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Costco Wholesale Corporation (COST) reported robust March 2026 sales results, demonstrating continued solid comparable growth. Global core comparable sales increased by 6.2%, with US core comparable sales also rising by 6.2%. On a two-year stacked basis, US core comparable sales reached 15%, while global figures stood at 16.5%. Global foot traffic grew by 1.5% and US traffic by 0.7%, figures impacted by an Easter calendar shift. However, the two-year stacked traffic growth remained healthy at 7.6% globally and 6.8% in the US, signaling stable underlying demand momentum.
The average transaction value surged by 7.8%, significantly fueled by higher gasoline prices, with the global average fuel cost per gallon rising 17.8%. Core digital sales also accelerated, growing 22.5% compared to 20.8% in February. Adjusting for the Easter calendar shift, foreign exchange, and fuel impacts, Costco's comparable sales growth would have been 7.8%, consistent with prior readings and surpassing market expectations of 6-7%.
UBS maintains its Buy rating and a 12-month target price of $1,205. This valuation is based on an unchanged multiple of approximately 47 times earnings and a calendar 2027 EPS estimate of $25.55. UBS views the March performance as further evidence that Costco can consistently outperform its own challenging historical comparisons. With fuel prices likely to remain supportive in the near term—drawing members to warehouses and subsequently boosting merchandise sales—Costco maintains a distinct relative advantage against consumer staples peers facing a tougher macroeconomic backdrop.