Key Stats for Costco Stock
- Current Price: $920.65
- Target Price (Mid): ~$1,410
- Street Target: ~$1,060
- Potential Total Return: ~54%
- Annualized IRR: ~9% / year
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What Happened?
Costco Wholesale (COST) produced its strongest cash year since at least fiscal 2021 in the year ended August 30, 2026. Free cash flow rose 19.8% to $9.39 billion, per TIKR data, yet consensus has it falling about 19% to around $7.6 billion in fiscal 2027. At its October 2 close of $920.65, the stock trades at about 54 times next-twelve-months free cash flow, so how long the dip lasts matters.
Wall Street Expects Lower Cash Flow and Higher Spending
Two estimates sit behind the forecast. Consensus has operating cash flow falling about 12% to around $14.0 billion, after it rose 18.7% to $15.825 billion in fiscal 2026 and beat estimates in all four quarters.
Capital spending moves the other way. According to Costco’s investor relations materials and the fourth-quarter results call, CFO Gary Millerchip guided to “approximately $7.5 billion in capital expenditure” for fiscal 2027, up from $6.435 billion. He said the increase is “predominantly due to a growth in the pipeline of new warehouses,” alongside continued supply chain investment. The guide sits about $240 million above the Street’s spending estimate, a small gap that points toward lower free cash flow if other estimates hold.
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The Fiscal 2028 Rebound Assumes Spending Falls
Consensus has free cash flow rebounding to around $9.3 billion in fiscal 2028. Part of that rests on capital spending dropping about 6% to around $6.8 billion.
Management has not guided to a cut. Millerchip said: “Beyond fiscal year 2027, we would expect to see a slowing in the rate of capital expenditure growth following 3 years of outsized growth that began in fiscal year 2025.” Slower growth still means growth, and Costco is targeting 30 net new warehouses a year. If spending keeps rising after fiscal 2027, the rebound the Street models arrive smaller or later.
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Infill Warehouses Decide How Fast Spending Pays Back
Costco plans 33 openings in fiscal 2027, five of them relocations. Its international plans for the year include four buildings in Europe, five in Canada, and one in Mexico.
CEO Ron Vachris said infills in mature U.S. markets bring “many fewer new sign-ups, but a much quicker maturity curve for sales and profitability.” New markets such as Buffalo, New York, and Lawrence, Kansas, add more members but typically take longer to mature. The more of the pipeline that sits in infills, the sooner new buildings can fund the next ones.
TIKR Advanced Model Analysis
- Current Price: $920.65
- Target Price (Mid): ~$1,410
- Potential Total Return: ~54%
- Annualized IRR: ~9% / year
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The TIKR model’s mid case projects around $1,410 by August 31, 2031, about 54% above $920.65, or around 9% a year. Its mid-case inputs include revenue growth of around 6% a year, a net income margin of around 3.2% versus 3.0% in fiscal 2026, and a slight annual decline in the P/E ratio.
For comparison, the Street’s 12-month mean target is around $1,060, down from around $1,080 on August 30, 2026. The main risk is spending that keeps climbing after fiscal 2027. Faster revenue growth would lift returns above the mid case, while a faster de-rating would cut them.
Conclusion
The fiscal first-quarter report, expected in December, gives the first read. Operating cash flow near the $4.688 billion Costco posted in the year-earlier quarter would be an early sign the Street’s 12% full-year decline is too cautious. A sharp drop, or a spending guide raised above $7.5 billion, would point to a deeper fiscal 2027 trough.
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So what is Costco stock actually worth?
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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!
