Costco’s third quarter results were met with a positive market reaction, driven by broad-based growth across both traditional and digital sales channels. Management cited strong performance from ancillary businesses such as gas, pharmacy, and travel, with CEO Ron Vachris highlighting that “gas, pharmacy, and travel led the way, all growing at a faster pace than our overall growth rate.” CFO Gary Millerchip further noted the impact of increased executive membership penetration and digital sign-ups, which contributed to higher renewal rates and spending per member.
Is now the time to buy COST? Find out in our full research report (it’s free for active Edge members).
Costco (COST) Q3 CY2026 Highlights:
- Revenue: $95.72 billion vs analyst estimates of $94.85 billion (11.1% year-on-year growth, 0.9% beat)
- Adjusted EPS: $6.60 vs analyst estimates of $6.52 (1.2% beat)
- Operating Margin: 4%, in line with the same quarter last year
- Locations: 939 at quarter end, up from 914 in the same quarter last year
- Same-Store Sales rose 9.4% year on year (5.7% in the same quarter last year)
- Market Capitalization: $409.1 billion
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Costco’s Q3 Earnings Call
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Michael Lasser (UBS) asked about the effectiveness of tariff refund reinvestments on driving sales growth. CFO Gary Millerchip explained that these investments were aimed at reinforcing member value, with robust nonfood and travel sales signaling continued demand for value-oriented offerings.
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Simeon Gutman (Morgan Stanley) inquired about narrowing membership growth relative to warehouse expansion. Millerchip highlighted strong executive member penetration and increased spending per member, indicating overall health in the membership base despite normalization of growth rates.
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Scot Ciccarelli (Truist) questioned the persistently slowing membership growth and its potential for recovery. Millerchip stated that current growth rates are expected to persist, with executive member penetration and international expansion as possible catalysts for future acceleration.
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John Heinbockel (Guggenheim) asked about anticipated vendor price increases and the role of Kirkland Signature in addressing cost pressures. CEO Ron Vachris described the collaborative approach to mitigating commodity inflation and emphasized ongoing expansion of the Kirkland Signature brand as a pricing lever.
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David Bellinger (Mizuho) probed whether third-party delivery is the final delivery solution for Costco. Vachris responded that delivery partnerships augment the core offering and appeal to younger members, with most transactions being incremental rather than substitutive.
Catalysts in Upcoming Quarters
In upcoming quarters, our analysts will be watching (1) the execution and pace of new warehouse openings, both in the U.S. and internationally, (2) the effectiveness of digital initiatives and third-party delivery expansion in sustaining incremental sales, and (3) trends in membership growth and renewal, particularly among younger and executive members. The impact of ongoing price investments and supply chain management will also be key indicators of operational discipline.
Costco currently trades at $922.26, up from $897.41 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).
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