Costco's Strong June Sales Reinforce Its Case as a Defensive Stock

Costco Wholesale Corporation’s COST recent June sales data supports its reputation as a defensive retail stock. In the current economic climate, where consumer spending patterns remain mixed, Costco’s ability to generate 8% year-over-year growth in net sales to $26.44 billion speaks volumes about its value-driven membership model. The company’s steady sales trajectory underscores its alignment with cost-conscious shoppers seeking quality at competitive prices.

Strength in comparable sales solidifies Costco’s defensive thesis. U.S. comparable sales rose 4.7%, while Canada and other international markets saw gains of 6.7% and 10.9%, respectively. Excluding gas and forex impacts, total comparable sales grew 6.2% in June. These figures highlight Costco’s demand resilience across regions, providing a diversified buffer against localized economic softness.

E-commerce performance was another bright spot, with June digital sales climbing 11.5%. This strength in online channels complements its robust physical footprint, enhancing its ability to capture consumer dollars across multiple touchpoints.

Costco’s solid June performance highlights why investors often view the stock as a defensive holding. Its consistent traffic, resilient comps and digital gains underscore the strength of its business model in volatile times. Steady results across diverse markets and channels reflect operational resilience and enduring consumer loyalty, key traits that support Costco’s reputation as a reliable performer in a challenging retail environment.

How Are Costco Peers DG & TGT Keeping Up With Sales?

Dollar General Corporation DG reported a 2.4% increase in first-quarter fiscal 2025 same-store sales, driven by a 2.7% rise in the average transaction amount, though partially offset by a 0.3% decline in customer traffic. Dollar General saw growth across all key product categories, including consumables, seasonal, home products and apparel. Dollar General now expects same-store sales to rise between 1.5% and 2.5% compared to its prior forecast of 1.2% to 2.2%.

Target Corporation TGT experienced a 3.8% decline in comparable sales, following a 1.5% increase in the preceding quarter. This drop was attributed to a 5.7% fall in Target’s comparable store sales, which was somewhat offset by a 4.7% increase in comparable digital sales. Target highlighted that traffic, or the number of transactions, dropped 2.4%, and the average transaction amount decreased 1.4%.

Costco’s Price Performance, Valuation and Estimates

Costco stock has been a standout performer, with shares rallying 14.4% in the past year, outpacing the industry’s growth of 6.6%. 
 

From a valuation standpoint, Costco's forward 12-month price-to-earnings ratio stands at 49.17, higher than the industry’s ratio of 32.36. COST carries a Value Score of D.
 

The Zacks Consensus Estimate for Costco’s current financial-year sales and earnings per share implies year-over-year growth of 8.1% and 11.6%, respectively. 
 

Costco currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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