Key Takeaways:
- Price Projection: Costco Wholesale Corporation stocks could reach $1,165 by 2028 based on steady sales growth and margin discipline.
- Potential Gains: This target represents 21% upside from the current price of $964, reflecting earnings growth rather than valuation expansion.
- Revenue Momentum: Costco posted 8% revenue growth recently, showing resilient demand across warehouses and international markets.
- Annual Return: The model implies a 8% annualized return over 3 years, supported by stable margins and predictable cash generation.
Costco Wholesale Corporation (COST) runs a global membership warehouse network and generated about $280 billion in recent revenue, supported by high renewal rates and scale efficiency.
Costco drew attention after director share transactions in 2026, which affected sentiment but did not change operating performance or long-term strategy.
The company delivered 8% revenue growth recently, showing continued traffic strength and pricing discipline across core grocery and discretionary categories.
Costco earned roughly $2 billion in quarterly net income with operating margins near 4%, reflecting cost control and a high-volume low-markup model.
Even as revenue and profits rise, the stock trades near 45x earnings which creates tension between strong execution and a valuation that still demands consistency.
What the Model Says for COST Stock
We analyzed Costco stock using assumptions tied to steady warehouse expansion, resilient membership economics, and disciplined cost control supporting consistent operating performance.
Based on 7.6% revenue growth, 4.0% operating margins, and a 44.5x exit multiple, the model projects a price of $1,165.10.
That implies a 20.8% total return, or 7.5% annualized return through 2028, ending at $1,165.10.
Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for COST stock:
1. Revenue Growth: 7.6%
Costco delivered historical revenue growth of 8.2% over one year and 10.5% over five years, reflecting consistent warehouse expansion and strong member renewal economics across regions.
Recent revenue performance shows continued momentum as global store openings and stable traffic volumes support growth, while pricing discipline preserves Costco’s value perception among members.
Forward growth depends on sustained membership additions, international warehouse rollout, and steady e-commerce contribution, with risks tied to consumer spending cycles and foreign exchange exposure.
A 7.6% revenue growth assumption reflects durable demand and expansion capacity balanced against Costco’s mature scale and slowing incremental unit growth.
2. Operating Margins: 4%
Costco stocks has historically maintained operating margins between roughly 3% and 4%, highlighting its low-margin, high-volume model anchored by price leadership and membership income.
Current margins near 3.6% show stability as merchandise discipline and renewal fees offset labor and logistics cost pressures across a growing global footprint.
Margin improvement depends on operating leverage from higher sales per warehouse and disciplined expense control, while competitive pricing limits upside during inflationary or promotional periods.
Operating margins of 4.0% reflect modest normalization through scale efficiency without assuming structural changes to Costco’s value-driven model.
3. Exit P/E Multiple: 44.5x
Costco has historically traded at premium earnings multiples, with recent valuations around 49.4x reflecting predictable cash flows, resilient demand, and high investor confidence.
The current valuation embeds optimism around stability rather than acceleration, as investors favor consistency over rapid margin expansion in a defensive retail format.
Multiple sustainability relies on continued renewal strength, steady earnings growth, and limited volatility, while sharp cost shocks or traffic declines could pressure sentiment.
Based on street consensus estimates, a 44.5x exit multiple reflects confidence in Costco’s earnings durability while allowing for moderation from recent peak valuation levels.
What Happens If Things Go Better or Worse?
Costco’s outcomes depend on membership retention, warehouse productivity, and cost discipline, creating a range of execution paths through 2030.
- Low Case: If traffic softens and costs stay tight, revenue grows around 6.4% and margins hold near 2.9% → 2.8% annualized return.
- Mid Case: With steady demand and disciplined execution, revenue growth near 7.1% and margins improve toward 3.1% → 7.8% annualized return.
- High Case: If global expansion and renewal strength outperform, revenue reaches about 7.8% and margins approach 3.3% → 12.3% annualized return.
Costco’s $1,362.20 target depends on consistent execution and cost control through 2030, not aggressive growth or multiple expansion.
How Much Upside Does It Have From Here?
With TIKR’s new Valuation Model tool, you can estimate a stock’s potential share price in under a minute.
All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E multiple
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
