Costco Stock Forecast 2025–2029: Can It Hit $1 339 or Crash First?

Costco Wholesale has captivated investors with its robust growth, loyal customer base, and resilient business model. With a stock price soaring near $1 000 and a 36.1% gain over the past year, is this retail giant still a smart investment, or does its premium valuation signal caution? Dive into our Costco stock forecast for 2025–2029 to uncover whether now is the time to buy or wait for a better entry point.

Operations

Costco Wholesale Corporation (operates a global network of membership-based warehouse clubs, offering a wide range of branded and private-label products at low prices. As of April 2025, Costco operates 904 warehouses across the:

• United States (623),
• Canada (109),
• Mexico (41), Japan (37), United Kingdom (29),
• other countries including Korea, Australia, Taiwan, China, Spain, France, Iceland, New Zealand, and Sweden.

The company’s business model emphasizes high sales volume, rapid inventory turnover, and low operating costs, achieved through bulk purchasing, efficient supply chain management, and a no-frills shopping experience.

Costco’s membership model drives customer loyalty, with renewal rates of 93% in the U.S. and Canada and 90.5% globally, and a paid household member base of 78.4 million as of Q2 FY25 (ended February 16, 2025). The company continues to expand, planning to open 28 new warehouses in fiscal 2025, including 25 net new locations. E-commerce is also a growing segment, with a 22.2% year-over-year increase in comparable sales in Q2 FY25.

Financial Performance and Ratios

Costco’s financial performance remains robust, reflecting its resilience in a competitive retail environment. In Q2 FY25 (ended February 16, 2025), Costco reported:

• Revenue: $63.7 billion, up 9% year-over-year, surpassing estimates by $0.6 billion.
• Net Sales: $62.53 billion, a 9% increase from $57.33 billion in the prior year, driven by comparable sales growth and new warehouse openings.
• Membership Fee Revenue: $1.193 billion, up from $1.111 billion, fueled by new member sign-ups and fee increases.
• Operating Income: $2.316 billion, a 12.3% increase from $2.062 billion, attributed to improved gross margins and controlled SG&A expenses.
• Net Income: $1.788 billion, or $4.02 per diluted share, compared to $1.743 billion, or $3.92 per share, in the prior year.
• Cash Flow: Operating activities generated $6.008 billion, while investing and financing activities used $2.007 billion and $1.434 billion, respectively.
• Comparable Sales Growth: 9.1% company-wide (adjusted), with 8.6% in the U.S. and 22.2% in e-commerce.

Key Financial Ratios (as of May 2025):

• Quick Ratio: 0.43, indicating limited liquidity for short-term obligations without inventory sales.
• Current Ratio: 0.98, suggesting near-parity between current assets and liabilities.
• Debt-to-Equity Ratio: 0.23, reflecting low leverage and a strong balance sheet with $6.1 billion in net cash.
• Price-to-Earnings (P/E) Ratio: Approximately 54–57, indicating a premium valuation compared to competitors like Walmart (P/E: 36) and Target (P/E not specified but valued at 0.5 times sales).
• Dividend Payout Ratio (DPR): 30.36%, suggesting a sustainable dividend policy with room for growth.

Over the last 12 months, Costco generated $264.1 billion in revenue with a 6.1% year-over-year growth rate, underscoring its ability to maintain steady growth.

Costco Wholesale Stock Price Performance

Costco’s stock (NASDAQ: COST) has shown strong performance, though it trades at a premium. As of May 29, 2025:

• Stock Price: Approximately $999.03 (opened on a recent Wednesday).
• 52-Week Range: $771.43 (low) to $1,078.24 (high).
• Year-to-Date Performance: Shares rose 36.1% in the past year, outperforming the U.S. Consumer Retailing industry’s 18.2% growth and competitors like Dollar General (-38.6%), Dollar Tree (-40.1%), and Target (-45.7%).
• Five-Year Total Return: 239.98%, significantly outpacing the industry’s 30.8% return.
• Recent Volatility: The stock experienced a 6.1% drop on a single day in March 2025, the largest since December 2022, due to Q2 FY25 earnings slightly missing EPS estimates ($4.02 vs. $4.11 expected). Despite this, the stock rebounded, gaining 6% in the past month against a 3% broader market decline.

The high P/E ratio (54–57) reflects investor confidence in Costco’s growth but has led to concerns about overvaluation, with some analysts downgrading the stock to a “Sell” after a 74% rise since late 2023.

Competitive Landscape

Costco operates in a highly competitive retail sector, primarily competing with:

• Walmart (Sam’s Club): Offers a similar membership-based warehouse model but with a broader retail presence. Walmart’s lower P/E ratio (36) and higher dividend yield (1%) appeal to value and income investors.
• BJ’s Wholesale Club: A smaller player with a similar model but less global reach and scale.
• Target: Focuses on traditional retail but competes on price and product variety. Target’s stock has underperformed, declining 45.7% in the past year.
• Dollar General and Dollar Tree: Discount retailers targeting budget-conscious consumers but struggling with significant stock declines (-38.6% and -40.1%, respectively).

Costco’s competitive advantages include:

• Membership Model: High renewal rates and membership fees provide a stable revenue stream, insulating it from economic downturns.
• Scale and Efficiency: Bulk purchasing and low-cost operations enable competitive pricing.
• Global Expansion: Strong international performance, particularly in Canada, and plans for new warehouses enhance growth prospects.
• E-commerce Growth: Significant online sales growth (22.2% in Q2 FY25) positions Costco to compete with digital retailers.

However, potential tariff increases pose a challenge, as they could raise costs and require price adjustments, impacting margins.

Investment Insight

Costco is a company that investors highly favor, often driving its stock price above its intrinsic value. Market participants are clearly betting on future growth, and these expectations are well-founded given Costco’s robust fundamentals, market expansion, and exceptional inventory turnover.

High turnover is critical for retail companies, as it drives the Cash Flows necessary to sustain operations and growth. In the Retail sector, Net profit margins typically range from 3-8%, while Gross margins fluctuate between 10-30%. Only companies with significant sales volume and efficient inventory management, like Costco, can consistently generate strong Free Cash Flows.

However, the high P/E ratio (54–57) and low dividend yield (0.52%) suggest caution for value and income investors, who may prefer cheaper alternatives like Walmart. Potential tariff impacts could pressure margins, but Costco’s scale and pricing power mitigate risks.

Costco is a Hold for existing investors due to its strong fundamentals and growth prospects, particularly in e-commerce and international markets. New investors may consider waiting for a price dip given the elevated valuation. The recent dividend hike and product diversification enhance its appeal, but tariff risks and analyst downgrades warrant monitoring.

Costco Wholesale Stock Forecast**

2025–2029 Price Targets: 

Year	MIN Target	MAX Target
2025	786.12	1 075.38
2026	830.42	1 135.99
2027	877.22	1 200.01
2028	926.65	1 267.63
2029	978.87	1 339.07

When to buy and Investment Tips

If you were to buy Costco shares now, under an optimistic scenario, you could expect an average annual return of approximately 8%, plus dividends. The historical 10-year price CAGR (Compound Annual Growth Rate) for Costco is around 7%. However, purchasing shares at the current price increases your investment risk, as the Equity risk premium is -2.86%, reflecting a less favorable risk-reward tradeoff.

Given the market’s strong enthusiasm for Costco, with its high valuation (P/E ratio of 54–57 as of May 2025), it’s uncertain whether a deeper market correction will occur. Investors should be aware that buying now entails higher risk compared to purchasing during a market correction, when shares may be available at a lower price.

Dividend Policy and Buyback Policy

Costco maintains a shareholder-friendly capital return strategy:

• Dividend: On April 16, 2025, Costco increased its quarterly dividend by 12%, from $1.16 to $1.30 per share, resulting in an annualized payout of $5.20 and a yield of 0.52%. The dividend is payable on May 16, 2025, to shareholders of record as of May 2, 2025. The company has a history of consistent dividend growth and occasional special dividends, such as $15 per share in January 2024 and $10 per share in December 2020. The dividend payout ratio of 30.36% indicates sustainability and potential for future increases.
• Share Buybacks: Costco repurchased $3.1 billion in stock over the last 12 months, equivalent to 0.8% of its market capitalization, reinforcing its commitment to enhancing shareholder value.

However, the low dividend yield (0.52%) makes Costco less attractive for income-focused investors compared to peers like Walmart (1% yield).

Latest News and Impact on Company Value

• Dividend Increase (April 16, 2025): Costco raised its quarterly dividend by 12% to $1.30 per share, signaling strong cash flow and management confidence. This move boosted investor sentiment, contributing to a 6% stock price increase over the past month despite broader market declines.
  • Impact: Enhances shareholder value and reinforces Costco’s appeal as a dividend growth stock, though the low yield limits its attractiveness for income investors.
• New Product Offerings (April 17, 2025): Costco introduced Edna’s Non-Alcoholic Cocktail Co. products in 30 locations, diversifying its offerings to cater to evolving consumer preferences.
  • Impact: Supports sales growth and strengthens Costco’s brand as a destination for unique products, potentially attracting new members and boosting revenue.
• Q2 FY25 Earnings (March 13, 2025): Costco reported strong revenue growth but slightly missed EPS estimates ($4.02 vs. $4.11), leading to a 6.1% stock price drop, the largest in over three years.
  • Impact: The miss highlighted valuation concerns, with analysts noting the stock’s high P/E ratio (54–57). However, robust sales and membership growth reaffirmed Costco’s operational strength, supporting a subsequent recovery.
• Shareholder Rejection of Anti-DEI Proposal (May 2, 2025): Over 98% of Costco shareholders voted against a proposal to evaluate the financial risks of its DEI policies, reinforcing investor support for Costco’s governance and social responsibility.
  • Impact: Bolsters Costco’s reputation among socially conscious investors, potentially attracting ESG-focused funds and enhancing long-term value.
• Analyst Downgrades and Valuation Concerns: William Blair cut Q3 FY25 EPS estimates, and some analysts downgraded Costco to “Sell” due to its high valuation after a 74% stock price increase since late 2023.
  • Impact: Raises caution for value investors, potentially limiting near-term upside, but Costco’s fundamentals remain strong for long-term investors.

Conclusion

Costco Wholesale remains a powerhouse in retail, with strong fundamentals, a loyal membership base, and impressive e-commerce growth. However, its high P/E ratio (54–57) and low dividend yield (0.52%) suggest elevated risks for new investors at current prices. While long-term prospects are solid, waiting for a market correction could offer a better entry point. Hold for existing investors; approach with caution for new buyers.

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*Investment analysis involves scrutinizing over 50 different criteria to assess a company's ability to generate shareholder value. This comprehensive approach includes tracking revenue, profit, equity dynamics, dividend payments, cash flow, debt and financial management, stock price trends, bankruptcy risk, F-Score, and more. These metrics are consolidated into a straightforward Investment Scoreboard, which effectively helps predict future stock price movements.
**Use the price forecast to manage the risk of your investments.