Will 2026 Mark a Turnaround for Costco?

2025 has been a mixed bag for consumer staples companies operating in the retail space. While Target’s (NYSE: TGT) well-documented struggles have resulted in a year-to-date (YTD) loss of more than 34%, others have fared much better. 

Walmart (NYSE: WMT), for example, has proven capable of adapting to President Trump’s tariff policies and the subsequent shift in consumer sentiment. 

The company—a dividend king, the largest grocer in the United States, and an emerging e-commerce disruptor—has posted a YTD gain of nearly 25%. 

Membership-only warehouse club Costco Wholesale (NASDAQ: COST) finds itself somewhere in the middle with an uninspiring 1.34% YTD gain.

So far in 2025, shareholders have had to endure corrections of more than 17%, 12% and 8%. 

But with the calendar about to turn to 2026, current and prospective investors are looking forward to a bounce-back year driven by Costco’s loyal members, strong underlying fundamentals, and bullish forecasts from Wall Street analysts. 

Costco Has Adapted to Tariffs and Continued to Expand

On Monday, it was reported that Costco is suing the Trump administration and demanding a refund for what the U.S. Court of International Trade in New York and the U.S. Court of Appeals for the Federal Circuit in Washington have ruled as “illegal” import taxes stemming from the president’s tariffs. 

While the litigation may take months to resolve, it highlights the broader challenges the company has faced—and how it has navigated them.

A key response has been the expansion of Costco’s private label brand, Kirkland Signature, which celebrated its 30th anniversary in 2025. According to president and CEO Ron Vachris’s fiscal year (FY) 2025 Q4 earnings call comments, “Kirkland Signature sales penetration continues to increase, bringing even more high-quality value to our members while offsetting potentially inflationary impacts from tariffs.”

That strategy has proven effective, with the company expanding its Kirkland Signature offerings in an effort to provide customers with high-quality alternatives to some tariff-impacted goods. According to CFO Gary Millerchip, those products typically offer members 15% to 20% value compared to national brand alternatives with equal quality. 

In Q4 alone, Costco launched over 30 new Kirkland Signature items, while its ancillary businesses—including the company’s pharmacy, optical, and hearing aids—all posted strong quarters. Meanwhile, Vachris noted that Costco’s merchants adjusted their plans to mitigate tariff impacts for the warehouse giant. 

That enabled the company to continue its growth trajectory. In its FY 2025, Costco opened 27 new warehouses, bringing its total to 914, with plans for 35 additional locations in FY 2026. That includes both domestic and international expansion. 

But the company has also been increasing its e-commerce presence, with sales topping $19.6 billion, marking a 15% year-over-year (YOY) increase, while digitally enabled sales surpassed $27 billion for FY 2025. 

Costco’s Strong Fundamentals Have Remained Intact 

The warehouse club’s core business—selling memberships—has sustained an incredibly strong renewal rate of around 90% in the United States and Canada. That contributed to Costco beating on the top and bottom lines when it reported FY 2025 Q4 earnings on Sept. 25—its ninth earnings beat in its last 10 quarters. 

But the stock was punished in the wake of its earnings calls, with shares sliding more than 6% before bottoming on Nov. 24. Since then, COST is up more than 4%, and investors have more to look forward to from the company’s FY 2026. 

Earnings are expected to grow 9.21% next year, from $18.03 per share to $19.69 per share. The company reported that quarterly revenue rose 8.1% YOY to $86.16 billion, while net income rose to $2.61 billion, more than 11% YOY, and paid memberships reached 81 million, up 6.3% YOY. 

That growth has reflected a pattern of conscientious management that, in turn, has been reflected by strong financials. From 2022 to 2025, Costco’s net income has grown by an annual average of 11.15%. Over the same period, annualized earnings per share (EPS) growth has averaged 11.53%. 

Perhaps most impressively, the company’s net cash from operating activities grew more than 80% from 2022 to 2025, increasing from $7.39 billion to $13.33 billion. 

What Wall Street Thinks of Costco

Of the 32 analysts covering Costco, it receives a consensus Moderate Buy rating, with 19 assigning it a Buy rating, 13 assigning it a Hold, and none assigning it a Sell. 

Analysts’ average 12-month price target of $1,027.75 represents 11.47% potential upside from where shares are currently trading. While that may not present tremendous upside, it is complemented by a dividend that yields 0.56%, or $5.20 per share annually based on current prices. 

Over the past year, institutional ownership (68.48%) has remained healthy and bullish, with 3,106 buyers outnumbering 2,596 sellers. That has resulted in inflows of more than $51 billion compared to outflows of nearly $27 billion. 

At the same time, Wall Street’s bears are proceeding with caution. Short interest in Costco currently sits at just 1.63% of the float.

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