The Pulse
Let me be direct — while the entire market was losing its mind over Dell's AI explosion, quietly, Costco just delivered one of the most impressive quarters in retail history and the stock sold off.
That's your opportunity.
$COST reported Q3 FY2026 revenue of $70.53 billion, up 11.6% YoY, beating Wall Street's $69.81B estimate by $720M. Net income hit $2.19 billion (+15% YoY) with diluted EPS of $4.93 matching estimates exactly.
But the real story is in the details that most traders missed:
Adjusted comparable sales surged 6.6% — in an environment where most retailers are fighting for every basis point. E-commerce? Up nearly 21%. Website traffic? Up 37%.
Here's the kicker: The final 5 weeks of the quarter saw record-breaking gas volumes as fuel prices spiked from Middle East tensions. CEO Ron Vachris made it crystal clear: "members who use our gas stations typically spend more with us in the warehouse."
Membership grew 4.1%. Paid households keep climbing. The flywheel is accelerating.
And yet — the stock dropped to $956 after hitting an all-time high of $1,096.50 just 10 days earlier. A 12.8% pullback from ATH on a quarter this strong?
That's not a sell signal. That's the market giving you a gift.
Key News
💰 Q3 FY2026 Revenue: $70.53B — Beat consensus of $69.81B by ~1%
📈 EPS: $4.93 vs $4.93 est (In-line) — But net income +15% YoY at $2.19B
🛒 Comparable Sales: +6.6% adjusted — Exceptional in current retail environment
🌐 Digital / E-Commerce: +20.7% growth — Website & app traffic up 37%
👥 Membership Growth: +4.1% paid members — Renewal rates remain industry-leading
⛽ Gas Volumes: Final 5 weeks = Top 5 volume weeks EVER in company history
💊 Top Categories: Pharmacy, Home Furnishings, Gold & Jewelry leading the way
📦 Net Sales: $69.15B (+11.6% YoY) — Prior year was $63.2B
🎯 Prior Year Comparison: EPS was $4.28 → now $4.93 (+15.2% YoY growth)
💵 Tariff Play: Costco began submitting tariff refund claims — plans to pass savings to members
📉 Stock closed at $956.32 (-3.91%) on May 29 — Down 12.8% from ATH $1,096.50
📈 YTD Performance: Still up ~12% from Jan open of ~$852 despite recent pullback
⚠️ Risk Note: Valuation remains rich (P/E ~40+). Post-ATH pullback could continue if macro deteriorates
Strategic Slam
Buy Zone: $930-$960 (current zone is the entry)
Costco rarely gives you these kinds of pullbacks. The stock ran from $852 (January low) to $1,096.50 (May 19 ATH) — a solid 28.7% run in under 5 months. The post-earnings dip to $956 represents a classic "buy the dip" setup on a company that literally just reported record everything.
Stop Loss: $900
Below psychological support and near the early-May consolidation base around $900-$920. A break below $900 would suggest deeper de-risking.
2026 Target: $1,150-$1,200
Here's the math: At a $70.53B quarterly revenue run rate (~$282B annualized), trading around $956 with ~442M shares outstanding = market cap ~$423B. That's roughly 1.5x annual sales — reasonable for a compounder growing revenue double-digits with expanding membership, surging e-commerce (+21%), and a moat that Warren Buffett would envy. Apply a modest 35x P/E on next year's estimated ~$20 annual EPS path, and you're looking at $700 in earnings power supporting a $1,150-$1,200 target. The tariff refund catalyst alone could add billions back to members' pockets, driving loyalty and foot traffic.
Catalyst Calendar:
• Near-term: Post-earnings oversold bounce likely as institutions digest the strong numbers
• Next Quarter (Q4 FY26, late Aug): Back-to-school + holiday prep season
• Ongoing: Tariff refunds rolling in → price reductions → member value perception boost
• Membership fee hike cycle: Historically every 5-6 years; overdue and massively accretive when announced
• International expansion: China stores continuing to outperform; Europe opportunity large
The Thesis in One Sentence:
$COST just proved again why it's the best retail business on Earth — 6.6% comps, 21% digital growth, record gas volumes, membership still climbing, and the market sold it off 13% from all-time highs because... reasons? This is the kind of mispricing that creates generational returns for patient investors who understand that Costco isn't a retailer — it's a membership economy with a literal license to print money.
The question isn't if Costco recovers — it's whether you own enough before the next leg up.
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