Goldman Sachs: Costco Wholesale F3Q — Top Line Strength and Membership Growth as the Company Continues to Invest in Value
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Goldman Sachs maintains a Buy rating on Costco Wholesale with a $1,050 target price following robust third-quarter results. Revenue climbed 9.1% year-over-year to $58.5 billion, while comparable sales increased 6.5%, both exceeding expectations. Membership growth remained a highlight, with paid members growing 7.5% and membership fee revenue rising 8.2% to $1.12 billion.
The company continues to invest in member value through price reductions and service enhancements, a strategy that Goldman views as reinforcing long-term loyalty and renewal rates. Gross margin contracted 0.3 percentage points to 12.8%, reflecting these deliberate investments. Nevertheless, operating income grew 8.5% to $2.2 billion, and EPS of $4.02 surpassed consensus of $3.95.
Geographically, comparable sales rose 6.2% in the United States, 7.1% in Canada, and 8.3% across other international markets. E-commerce sales demonstrated particular strength, increasing 12.5%. Lower gasoline prices created an approximately 0.5 percentage point headwind to comparable sales. The company plans to open 25 new warehouses in fiscal 2026, with the majority located outside the United States.
Goldman contends that Costco's membership model remains highly attractive in an inflationary environment. The quarterly dividend was raised 14% to $1.16 per share. The firm expects continued market share gains and steady membership growth to sustain outperformance.
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