Key Stats for Costco Wholesale Stock
- Past-Week Performance: 4%
- 52-Week Range: $844 to $1,078
- Valuation Model Target Price: $1,174
- Implied Upside: 19%
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What Happened?
Costco Wholesale Corporation stock rose about 4% this week, finishing near $989 per share, as investors reacted to a strong January sales update alongside continued analyst price target activity.
The advance developed steadily through the week, suggesting sustained buying interest rather than a one-day reaction.
The move was driven by Costco’s January sales results, which showed net sales of $21.33 billion, up 9.3% year over year. Total company comparable sales rose 7.1%, while comparable sales excluding gas and foreign exchange increased 6.4%.
Regionally, U.S. comps rose 5.8%, Canada climbed 11.4%, and digitally enabled sales surged 34.4%, reinforcing confidence that demand remains resilient despite gas price deflation.
Analyst actions added to the momentum last week. Oppenheimer raised its price target to $1,100 from $1,050 and reiterated an Outperform rating, while Wells Fargo increased its target to $950 from $900 and maintained an Equal Weight rating.
Costco currently carries a Moderate Buy consensus, with an average price target of about $1,006, keeping valuation and upside potential in focus for investors.
Institutional activity was mixed but constructive. ABN AMRO Bank increased its stake by 19% to 116,688 shares worth about $108 million, while Bessemer Group and BI Asset Management trimmed their positions, though both firms kept Costco among their larger holdings.
That pattern points to portfolio rebalancing rather than a broad shift away from the stock, helping support shares during the week.
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Is Costco Wholesale Undervalued?
Under valuation assumptions, the stock is modeled using:
- Revenue Growth (CAGR): 7.7%
- Operating Margins: 4.0%
- Exit P/E Multiple: 44.7x
Revenue growth reflects steady expansion rather than acceleration, supported by consistent warehouse traffic, disciplined pricing, and continued global store openings.
Analyst estimates suggest future growth is driven by higher average transaction values, ongoing membership growth, and international expansion rather than rapid volume acceleration.
This supports the view that Costco’s long-term performance depends more on earnings consistency and membership income than on aggressive top-line growth.
Membership fees remain a high-quality profit stream, providing predictable cash flow and helping offset margin pressure inherent in Costco’s value-focused pricing model.
Based on these inputs, the valuation model estimates a target price of about $1,174, implying roughly 19% total upside over the next 2.6 years, or about 7% annualized returns.
While the upside is not extreme, it suggests the stock still offers a favorable risk-reward profile under this framework.
At current levels, Costco appears undervalued, with future returns driven by stability, scale advantages, and disciplined execution rather than margin expansion or rapid growth acceleration.
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