Costco Wholesale (COST +0.30%) reported blowout earnings for the 2026 fiscal third quarter (ended May 10). The warehouse retailer is demonstrating accelerating sales growth and is even more popular as consumers seek the best prices amid rising inflation rates.
As outstanding as the report was, it wasn’t enough to boost the stock, though, which fell after the results were released. The market’s been worried about a slowdown happening as inflation persists, even though the impact so far has only been positive for Costco.
However, it just provided another round of excellent news for Costco shareholders, and the stock is rising again.
Sales are accelerating
First, here are some of the highlights in the third quarter:
- Sales increased 11.6% over last year.
- Comparable sales (comps) increased 9.8%.
- Earnings per share (EPS) were up from $4.28 last year to $4.93 this year.
Image source: Getty Images.
As always, Costco’s membership metrics tell a deeper narrative. Membership was up 4.1%, and the adjusted membership fee was up 7%. Renewal rates remained strong at 92.2% in North America and 89.7% worldwide. The worldwide rate has been slightly lower since Costco introduced online registration. However, online registration is also attracting younger members, which is an important development for the company’s long-term growth story.
Costco has been embracing digital technology in a number of ways that fit its unique model. It’s not set up for classic e-commerce, but it has a robust buy online, in-store pickup business, and it works with third-party platforms for same-day grocery deliveries. Digitally enabled sales have been a key growth driver over the past few months, and sales increased 21.5% year over year in the third quarter.
Today’s Change
(0.30%) $2.88
Current Price
$974.75
Key Data Points
Market Cap
$432B
Day’s Range
$961.00 – $978.98
52wk Range
$844.06 – $1096.50
Volume
976.3
Avg Vol
2M
Gross Margin
12.88%
Dividend Yield
0.55%
Another growth driver has been the company’s gas stations. As shoppers search for the lowest prices, customers who don’t usually use Costco’s pumps have been trying them out. CEO Ron Vachris said, “We believe this will drive even greater loyalty with these members in the future, as members who use our gas stations typically spend more with us in the warehouse.”
The news just got even better
Costco is one of the few public companies that report select monthly results as well as quarterly numbers, and there was another acceleration in May. Total revenue increased 14.5% over last year, while comps were up 12.5%. The highest comps were domestic, with a 13.7% increase in U.S. comps. These are its best monthly results since late 2021.
Based on the third-quarter commentary, higher oil prices likely play a big role in the acceleration. But based on the same commentary, these customers may continue to fill up at Costco and increase engagement across the business. So while there may be a near-term spike in sales due to what is hopefully a short-term jump in oil prices, there could be lasting benefits for Costco.
