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Quote this valuation with its source: Fair value, Potential value and the price at analysis.
FAQ
COST — frequently asked questions
Is Costco Wholesale Corporation overvalued?
In our latest published analysis dated 2026-09-21, COST looks meaningfully overvalued. The price recorded at analysis is 895 USD versus our fair value of 439 USD; the high endpoint is presented separately as potential value of 571 USD. That implies roughly 51.0% downside to fair value at that date.
Our latest published report, analyzed 2026-09-21, gives COST a fair value of 439 USD and a potential value of 571 USD. The conclusion is triangulated across multiple valuation models and weighted by reliability for Costco Wholesale Corporation's archetype; it is a dated research output, not a live price.
Should I buy COST now?
Our latest published rating for COST, analyzed 2026-09-21, is Sell. Costco Wholesale Corporation looks meaningfully overvalued at the analysis-date price of 895 USD versus fair value of 439 USD; potential value is 571 USD. This is research for educational purposes, not personalized investment advice.
What are the biggest risks for COST?
The dedicated bear-case section in our report analyzed 2026-09-21 documents Costco Wholesale Corporation's material risks, evidence, thresholds, and thesis-invalidation conditions. Scenario-specific explanations remain in that section so the report does not repeat or decontextualize them elsewhere.
What is COST's rating?
Our latest published rating for COST, analyzed 2026-09-21, is Sell, with a published moat assessment of 9/10 (Wide). It reflects our fair value of 439 USD, the potential value of 571 USD, and the price recorded at analysis (895 USD).
Este informe aún no se ha traducido. Actualice en unos minutos una vez que la cola de traducción se ponga al día.
§1 Resumen ejecutivoEN
Respuesta en 30 segundosSell
Precio frente a valor
Precio
$895.31
Valor razonable
$439.14
Valor potencial
$571.07
A fecha de
2026-09-18
Por qué puede funcionar
Accelerating international warehouse expansion in Canada and Asia delivering structurally higher operating margins (4.33% to 5.01% vs 3.44% in the US), with China executive tier adoption exceeding expectations, supporting compound cash flow growth toward Potential value of $571.07.
Qué cambiaría nuestra opinión
Forward valuation multiple de-rating below 24.0x or US comp sales growth slowing below 2.5% YoY.
We recommend a Sell on Costco Wholesale Corporation because the report-date share price sits at more than double its intrinsic Fair value.
Our house rating is Sell. For an everyday investor, this means new capital should not be committed to Costco at current trading levels, and existing holders should systematically sell or trim their positions to lock in gains and avoid severe valuation drawdown.
On the analysis date of September 18, 2026, the share price was $895.31. This price stands 103.9% above our Fair value of $439.14 and 56.8% above our Potential value of $571.07. The market price implies a 50.95% decline to reach fundamental Fair value.3
The biggest risk to an investor holding the shares is multiple de-rating. Costco trades at 40.0 times forward earnings, compared with peers trading between 16.6 and 20.5 times.
The strongest operational driver supporting long-term value is international warehouse expansion. Warehouses in Canada and Other International generate higher operating margins (5.01% and 4.33%) than domestic clubs (3.44%). As global clubs scale and depot automation lowers freight costs, higher cash flows per share can support value up toward Potential value of $571.07, although this remains far below the report-date price.6
High-Margin International Compounding
Warehouses in Canada and overseas generate higher operating margins (4.33% to 5.01%) than domestic clubs (3.44%), providing profitable growth as new units open.6
Depot Automation and Kirkland Signature Expansion
Active capital expenditure of $5.50B expands cross-dock depots and private-label manufacturing, widening price separation and boosting long-term cash flows.4,5
Scale-Driven Cost Advantage
Consolidated revenue of $275.24B in FY2025 allows Costco to negotiate industry-leading volume purchasing terms and cap merchandise markups at 14%-15%, creating an insurmountable pricing barrier for competitors.5
Recomendación de la casa
We rate Costco Wholesale Corporation a Sell because the report-date price of $895.31 trades at a 103.9% premium to intrinsic Fair value of $439.14, leaving investors exposed to severe downside if extended valuation multiples normalize.3
Descripción general de la empresa
COSTCO WHOLESALE CORP /NEW offers merchandise and services in the following categories: It is difficult to consistently and successfully predict the products and services that its members will desire. Its success depends, in part, on its ability to identify and respond to trends in demographics and consumer preferences.
The following table provides the revenue, significant expenses, and operating income for the Company's reportable segments: The following table provides depreciation and amortization and other asset related information for the Company's reportable segments:
§2 Caso bajistaEN
A concurrent stress test combining multiple de-rating toward peer medians (forward P/E compressing below 24.0x), gross margin compression from defensive price cuts in food staples, and domestic comp deceleration pushes intrinsic equity valuation down toward the low end of the committee range at $361.07. Under sustained commodity cost inflation and aggressive mass merchant delivery promotions, Costco's capital expenditure program ($5.50B in FY2025) would fail to yield anticipated operating leverage, severely depressing free cash flow conversion.
Capital expenditure requirements remain elevated without delivering anticipated throughput gains.
Domestic warehouse density limits new warehouse opening productivity.
The downside scenario reflects multiple contraction toward mass merchant peer averages alongside domestic same-store sales deceleration and freight inflation. Downside risks are tracked through operating checkpoints including merchandise gross margin resilience, new warehouse productivity, and member renewal rates. Disconfirmation of the downside thesis would require a sharp re-acceleration in domestic club foot traffic and sustained gross margin expansion.
Cómo puede fallar esta tesis
Multiple de-rating toward peer median upon growth deceleration
Costco trades at 40.0x forward P/E and 4.39x PEG, while mass merchant peers trade between 16.57x and 20.54x forward P/E. A 20% contraction in terminal multiple matches driver shock terminal_multiple_minus_20pct, reducing fair value by 20.0% if forward P/E compresses below 24.0x within 12 months.3
FV impact
-3.4%
Terminal multiple 20% lower
Trigger
Señales de alerta temprana a vigilar
Los cinco acontecimientos que debilitarían nuestra tesis de inversión.
01
forward_pe
Valuation multiple de-rating toward mass retail peer medians (16.57x-20.54x) reflecting market acknowledgment of growth normalization.
Actual:40.0x
Alerta siBelow 24.0x
02
us_membership_renewal_rate
§3 Foso competitivoEN
Wide
Costco Wholesale Corporation operates an entrenched wide economic moat anchored in a scale-driven cost advantage and high subscription-based switching costs. The company's business model relies on high inventory velocity, negative net working capital, and an aggressive pricing authority ethos where procurement savings are systematically returned to members rather than extracted as near-term gross margin. This flywheel drives extraordinary warehouse sales volumes that traditional grocery and mass retail competitors cannot replicate without impairing their unit economics.
Membership loyalty remains exceptionally durable, with North American renewal rates consistently exceeding 90% and global membership growth expanding 7% on an underlying basis. Membership fees flow almost entirely to operating income, subsidizing low merchandise markups and insulating the operating model against periodic freight and commodity cost shocks. This structural loyalty secures reliable customer foot traffic across economic cycles.
The company's competitive positioning is further reinforced by Kirkland Signature, which provides exclusive, high-quality merchandise at compelling price points, and an accelerating international warehouse footprint that captures higher segment operating margins in Canada (5.01%) and Other International (4.33%) relative to domestic US operations (3.44%).
Beneficio económico
Costco generates exceptional economic rent, evidenced by a return on invested capital of 24.18% that substantially exceeds its weighted average cost of capital of 8.45% and moderate cost of equity of 8.54%.2
9/ 10
Wide
Sources of advantage
01Scale-Driven Cost Advantage — Consolidated revenue of $275.24B in FY2025 allows Costco to negotiate industry-leading volume purchasing terms and cap merchandise markups at 14%-15%, creating an insurmountable pricing barrier for competitors.Wide
02Membership Switching Costs and Brand Loyalty — Upfront annual subscription fees drive high renewal rates above 90% in North America and generate predictable, high-margin cash flows that insulate the business from promotional grocery price cycles.Wide
03
Amenazas conocidas al foso
Amenaza
Severidad
Cronograma
Mitigación
Heightened mass merchant price competition and digital subscription perks
medium
12-24 months
Expansion of exclusive Kirkland Signature private-label assortment and targeted investments in digital member engagement and warehouse pickup logistics.
Capital expenditure cost inflation during logistics depot and warehouse expansion buildout
The highlighted cell is Fair value when every assumption sits at its base level ($439.14). Each row and column shows what Fair value becomes when one assumption moves.
Free cash flow to the firm stays positive in the first projected year at $5.6B after modeled reinvestment of $2.7B, with terminal value at 64.2% of enterprise value. A sudden drop in free cash flow is not projected unless capital spending relative to revenue, reinvestment, or gross margin resets materially.
Domestic comparable store sales growth compounds at mid-single-digit rates.
Under the base outcome, representing 60.0% probability, the stock converges toward $439.14, generating an implied return of -51.0% from $895.31. This path assumes steady mid-single-digit revenue growth and gradual operating margin normalization as membership fee gains offset freight inflation. Disconfirmation would occur if North American renewal rates drop below historical standards or if warehouse traffic turns negative over two consecutive quarters.
International warehouse openings accelerate across Asia and Europe delivering accretive segment operating margins.
Executive tier membership adoption in China and overseas territories exceeds initial corporate projections.
§7 Árbol de decisión de resultadosEN
Superado
Upgrade to Reduce; Re-examine warehouse traffic trends and international opening cadence; maintain defensive discipline and avoid adding exposure while the valuation remains disconnected from fundamental cash generation.
An earnings beat driven by volume throughput and membership fee growth demonstrates operational strength, but because $895.31 remains elevated relative to $439.14, the valuation multiple still reflects excessive optimism.
In-line results confirm predictable compounder execution, but do nothing to justify the extended valuation premium relative to $439.14.
Fallo
Maintain Sell; Accelerate liquidation or complete exit of remaining holdings; re-evaluate warehouse congestion and margin degradation checkpoints.
Disparador: Comparable warehouse sales deceleration, renewal rate softening, or gross margin compression from freight and price investments
A quarterly miss directly threatens the growth narrative supporting the premium multiple, accelerating multiple contraction toward peer averages.
Calidad de los beneficios
Earnings quality is exceptionally robust, characterized by rapid inventory turnover where merchandise is sold before supplier invoices are settled, generating sustained negative working capital and cash conversion that consistently exceeds net reported income. Operating cash flow conversion remains clean with minimal reliance on accruals, and receivables exposure is negligible due to immediate point-of-sale customer settlement. Capital expenditures are fully funded from organic cash generation without balance-sheet strain.
Métricas a vigilar antes de la publicación
01
Métrica:
North American Membership Renewal Rate
ActualSustained at historically high levels across North American warehouses, anchoring recurring cash flows.
Por qué importa
High renewal rates sustain upfront subscription fee cash flows that subsidize lower merchandise prices and drive customer traffic.
Operating cash flow reached $13,335M in FY2025, supporting free cash flow of $7,837M after $5,498M in capital reinvestment. Operating cash flow substantially exceeds net income of $8,099M, driven by a structurally negative working capital cycle where rapid inventory velocity enables customer cash collection prior to supplier invoice settlement.5
Asignación de capital
Capital allocation prioritizes organic warehouse expansion and supply chain modernization, with FY2025 capital expenditures reaching $5,498M (2.27x D&A) to expand the depot network and manufacturing capabilities. Shareholder distributions remain conservative, comprising $2,183M in regular dividends and $903M in share repurchases in FY2025 to offset equity dilution, while maintaining an exceptionally liquid balance sheet.
Costco's ROIC of 24.18% substantially outpaces its WACC of 8.45% and moderate cost of equity of 8.54%, generating durable economic profit across economic cycles.
Negative working capital model generates self-funding expansion
Ingresos más recientes275,2 mil M US$CAGR de ingresos +9,9 %
Margen operativo3,8 %9 periodos fiscales
Flujo de caja libre más reciente7837 M US$FY2025
Caja neta5063 M US$FY2025
Desglose de la cuenta de resultadosCómo la escala del negocio se convierte en beneficio declarado.
StockMarketAgent.AI
Ingresos275,2 mil M US$Coste de ventas−239,9 mil M US$Beneficio bruto35,3 mil M US$Gastos operativos−25 mil M US$Beneficio operativo10,4 mil M US$Partidas no operativas e impuestos−2284 M US$Beneficio neto8099 M US$
Datos del historial financiero
Ingresos
275.235.000.000 US$
Coste de ventas
239.886.000.000 US$
Beneficio bruto
35.349.000.000 US$
Gastos operativos
24.966.000.000 US$
Beneficio operativo
10.383.000.000 US$
Partidas no operativas e impuestos
-2.284.000.000 US$
Beneficio neto
8.099.000.000 US$
Resumen del balanceCómo se mantienen y financian los activos declarados en el período seleccionado.
StockMarketAgent.AI
Composición de activosFinanciado por
Activos totales77,1 mil M US$Efectivo14,2 mil M US$Activos corrientes38,4 mil M US$Pasivos totales47,9 mil M US$Pasivos corrientes37,1 mil M US$Patrimonio neto29,2 mil M US$
Datos del desglose del balance
Activos totales
77.099.000.000 US$
Efectivo
14.161.000.000 US$
Activos corrientes
38.380.000.000 US$
Pasivos totales
47.935.000.000 US$
Pasivos corrientes
37.108.000.000 US$
Patrimonio neto
29.164.000.000 US$
Puente de flujo de cajaCómo el flujo de caja operativo se convirtió en flujo de caja libre en FY2025.
StockMarketAgent.AI
Conciliación del flujo operativo
Beneficio neto8099 M US$Depreciación y amortización+2426 M US$Compensación basada en acciones+860 M US$Otros ajustes operativos+1950 M US$Flujo de caja operativo13,3 mil M US$
Conciliación del efectivo inicial al final
Efectivo inicial9906 M US$Flujo de caja operativo+13,3 mil M US$Flujo de inversión−5311 M US$Flujo de financiación−3775 M US$Efecto del tipo de cambio+6 M US$Efectivo final14,2 mil M US$
13,3 mil M US$ − 5498 M US$Flujo de caja libre 7837 M US$
Datos del puente de flujo de caja
Beneficio neto
8.099.000.000 US$
Entrada operativa
13.335.000.000 US$
Depreciación y amortización
2.426.000.000 US$
Compensación basada en acciones
860.000.000 US$
Otros ajustes operativos
1.950.000.000 US$
Flujo de caja operativo
13.335.000.000 US$
Efectivo disponible
23.247.000.000 US$
Efectivo inicial
9.906.000.000 US$
Efecto del tipo de cambio
6.000.000 US$
Salida de inversión
5.311.000.000 US$
Salida de financiación
3.775.000.000 US$
Recompras de acciones
903.000.000 US$
Dividendos pagados
2.183.000.000 US$
Amortización neta de deuda
296.000.000 US$
Otras actividades de financiación
393.000.000 US$
Efectivo final
14.161.000.000 US$
Flujo de inversión
-5.311.000.000 US$
Flujo de financiación
-3.775.000.000 US$
Ingresos por segmento operativoProporción de los ingresos totales de 2025-08-31.
275,2 mil M US$Ingresos totales
Ingresos por segmento operativoProporción
United States200 mil M US$72,7 %+8,6 % interanual
Other International38,3 mil M US$13,9 %+8 % interanual
Canada36,9 mil M US$13,4 %+5,9 % interanual
Fuente: SEC EDGAR · Presentado 2025-10-08 · SEC EDGAR
Datos de composición de ingresos: Ingresos por segmento operativo
Ingresos por segmento operativo
Ingresos
Proporción
interanual
United States
200 mil M US$
72,7 %
8,6 %
Other International
38,3 mil M US$
13,9 %
8 %
Canada
36,9 mil M US$
13,4 %
5,9 %
Ingresos y beneficiosCómo la escala del negocio se convierte en beneficio declarado.
Efectivo y deudaLiquidez disponible frente al endeudamiento total.
Generación de efectivoFlujo de caja operativo frente al flujo de caja libre.
RentabilidadEvolución de los márgenes bruto, operativo y neto.
Datos financieros puntuales utilizados en el análisis del 2026-09-21.
Datos del historial financiero
Período
Ingresos
EBITDA
Beneficio neto
Flujo de caja operativo
Flujo de caja libre
Capex
Depreciación y amortización
Compensación basada en acciones
Recompras de acciones
Dividendos pagados
Emisión neta de deuda
Flujo de inversión
Flujo de financiación
Efectivo inicial
Efectivo final
Efectivo e inversiones
Deuda total
Margen operativo
ROIC
WACC
Diferencial ROIC−WACC
2017-09-03
129 mil M US$
5543 M US$
2679 M US$
—
—
—
—
—
—
—
—
—
—
—
—
5779 M US$
6659 M US$
3,2 %
—
5,4 %
—
2018-09-02
141,6 mil M US$
6038 M US$
3134 M US$
5774 M US$
2805 M US$
2969 M US$
1437 M US$
544 M US$
328 M US$
689 M US$
—
-2947 M US$
-1281 M US$
4546 M US$
6055 M US$
7259 M US$
6577 M US$
3,2 %
—
6,1 %
—
2019-09-01
152,7 mil M US$
6407 M US$
3659 M US$
6356 M US$
3358 M US$
2998 M US$
1492 M US$
595 M US$
247 M US$
1038 M US$
—
-2865 M US$
-1147 M US$
6055 M US$
8384 M US$
9444 M US$
6852 M US$
3,1 %
—
4,9 %
—
2020-08-30
166,8 mil M US$
7176 M US$
4002 M US$
8861 M US$
6051 M US$
2810 M US$
1645 M US$
619 M US$
196 M US$
1479 M US$
—
-3891 M US$
-1147 M US$
8384 M US$
12,3 mil M US$
13,3 mil M US$
7657 M US$
3,3 %
—
3,2 %
—
2021-08-29
195,9 mil M US$
8632 M US$
5007 M US$
8958 M US$
5370 M US$
3588 M US$
1781 M US$
665 M US$
496 M US$
5748 M US$
—
-3535 M US$
-6488 M US$
12,3 mil M US$
11,3 mil M US$
12,2 mil M US$
7531 M US$
3,4 %
—
3,7 %
—
2022-08-28
227 mil M US$
9898 M US$
5844 M US$
7392 M US$
3501 M US$
3891 M US$
1900 M US$
724 M US$
439 M US$
1498 M US$
-933 M US$
-3915 M US$
-4283 M US$
11,3 mil M US$
10,2 mil M US$
11 mil M US$
10,9 mil M US$
3,4 %
—
5,6 %
—
2023-09-03
242,3 mil M US$
10,7 mil M US$
6292 M US$
11,1 mil M US$
6745 M US$
4323 M US$
2077 M US$
774 M US$
676 M US$
1251 M US$
-384 M US$
-4972 M US$
-2614 M US$
10,2 mil M US$
13,7 mil M US$
15,2 mil M US$
10,5 mil M US$
3,3 %
—
6,9 %
—
2024-09-01
254,5 mil M US$
12,1 mil M US$
7367 M US$
11,3 mil M US$
6629 M US$
4710 M US$
2237 M US$
818 M US$
700 M US$
9041 M US$
-708 M US$
-4409 M US$
-10,8 mil M US$
13,7 mil M US$
9906 M US$
11,1 mil M US$
9949 M US$
3,6 %
—
6,7 %
—
2025-08-31
275,2 mil M US$
13,4 mil M US$
8099 M US$
13,3 mil M US$
7837 M US$
5498 M US$
2426 M US$
860 M US$
903 M US$
2183 M US$
-296 M US$
-5311 M US$
-3775 M US$
9906 M US$
14,2 mil M US$
15,3 mil M US$
10,2 mil M US$
3,8 %
—
7,8 %
—
§9 Comparación de valoración con pares
Valor razonableReport-date price
Costco Wholesale CorporationCOST
Precio / valor razonable
Valor razonable439,14 US$Report-date price895,31 US$
Fecha de evaluación
Ventaja competitivaWide
Cuadro de mando de inversión69 / 100
Walmart Inc.WMT
Precio / valor razonable
Valor razonable75,66 US$Report-date price106,05 US$
Fecha de evaluación
Ventaja competitivaNone
Cuadro de mando de inversión50 / 100
Philip Morris International Inc.PM
Precio / valor razonable
Valor razonable248,88 US$Report-date price184,73 US$
Fecha de evaluación
Ventaja competitivaNone
Cuadro de mando de inversión56 / 100
Costco Wholesale CorporationCOST
Precio / valor razonable
Valor razonable439,14 US$Report-date price895,31 US$
Costco Wholesale Corporation (COST) trades at 40.0x forward earnings against a peer median of 19.3x. Its EV/EBITDA of 27.9x compares with a peer median of 17.5x. The comparison uses 4 peers: Walmart Inc., Philip Morris International Inc., Mondelez International Inc. and Target Corporation, as of 2026-09-21.
§10 Industria y cicloEN
Fase del ciclo
Expansion
Damodaran industry capex-to-revenue stands at 4.90% and capex-to-depreciation at 1.91x. Costco's FY2025 capex of $5.50B represents 2.00% of revenue and 2.27x depreciation, marking an active transformation build in depot automation and logistics.5
Ciclo alcista
During retail expansion cycles, consumers seek higher product quality and bulk package discounts, driving warehouse foot traffic, higher average spend per visit, and accelerating executive membership adoption.
Ciclo bajista
During macroeconomic downturns or inflationary squeezes, consumers prioritize immediate cash preservation over bulk purchases, while mass merchants wage aggressive grocery price wars and freight inflation pressures retail distribution costs.
Tendencias seculares
Tendencia
Impacto
Nota
Value-seeking consumer behavior and warehouse club format penetration
positive
Inflation-conscious households increasingly rely on wholesale clubs for lower unit pricing across consumer staples, grocers, and household goods.
Private brand expansion via Kirkland Signature
positive
Sustained adoption of high-tier private brands bolsters member retention and expands gross profit margin dollars across core categories.
Omnichannel retail delivery and digital fulfillment investments
neutral
Mass retailers continue to invest heavily in automated curbside pickup and same-day delivery, compelling Costco to accelerate digital warehouse capabilities.
Elevated interest rates and commercial construction cost pressures
negative
High real estate acquisition costs and elevated borrowing hurdles increase the capital intensity required for new warehouse depot builds.
Posicionamiento
Costco holds the preeminent market position in warehouse retail, maintaining unmatched volume throughput per club, high renewal loyalty, and expanding international presence that insulates it from regional competitors.
§11 Gestión de posiciónEN
Tamaño de posición
0%
Under a Sell rating with the stock trading at an extended 103.9% premium to Fair value ($439.14), zero capital should be allocated to new purchases, and existing holdings should be systematically liquidated to eliminate downside exposure.
Riesgo
Risk management requires rigorous adherence to capital preservation. Trading at 40.0x forward earnings leaves no margin of safety against execution stumbles or macro consumer slowdowns. Investors should hedge existing exposure, reallocate proceeds to defensive alternatives trading at or below intrinsic value, and strictly avoid averaging down on minor pullbacks until shares approach fundamental Fair value ($439.14).
Liquidate existing long positions or trim aggressively
Any technical rally toward $950.00 - $1,000.00
Complete final position exit
Puntos de control trimestrales
Métrica
Umbral
Acción
us_membership_renewal_rate
Below 88% over two consecutive fiscal quarters
Immediate full exit of any residual exposure and downgrade of fundamental compounder thesis.
operating_margin
Below 3.40% on a consolidated annual basis
Accelerate divestment as evidence confirms price investments and freight costs are permanently impairing operating leverage.
§12 Perspectivas de inversoresEN
Value Investor
Avoid
Trading at 40.0x forward earnings and a 103.9% premium to Fair value of $439.14, Costco offers no margin of safety for disciplined value capital.3
Growth Investor
Avoid
Even assuming double-digit earnings growth, reverse DCF demonstrates that the market price embeds an aggressive 17.29% 10-year EPS CAGR, creating substantial downside if growth normalizes toward 10.6%.1,3
Income / Defensive Investor
Avoid
A modest dividend yield from a low payout ratio (~27%) does not compensate for acute capital risk if multiples de-rate toward mass merchant averages.5
§14 Recomendación finalEN
Acción
Vender
We recommend a Sell rating for Costco Wholesale Corporation. While the company possesses an exceptional business model and wide moat, the stock trades at $895.31 as of September 18, 2026, which is 103.9% above our Fair value of $439.14. This extended multiple leaves shares highly vulnerable to severe multiple contraction.3
Investors should systematically trim or liquidate long positions and reallocate capital to defensive compounders trading at or below intrinsic value. New purchases should be strictly avoided until shares approach fundamental Fair value.
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Sources
The records this analysis drew on, as they stood when it was run.
Analyst consensusData as of 2026-09-21 · Published 2026-09-21 · Provider-adjusted · cited for 1 figureCited in Perspectivas de inversores
Not every cited input appears here: internal calculations and intermediate model outputs have no external record, and some citations could not be matched to one.
Operating margin compression from persistent retail price competition and freight inflation
In Q3 2026, gross margins contracted 9 bps due to price investments in food staples and transportation headwinds. If competition from mass merchants and commodity inflation compress operating margin by 300 bps below the current 3.77% level to 0.77% within 24 months, operating income falls sharply with a 75.5% fair value contraction under operating_margin_minus_3pp.4,5
FV impact
-6.4%
Operating margin 3 points lower throughout
Trigger
Within 24 months
Prolonged revenue growth slowdown across mature domestic warehouse footprint
Q3 2026 membership growth decelerated to 4.1% while US operations generate 72.7% of revenue ($200.05B). If domestic comp sales growth drops 5 percentage points below forecast to 2.5% YoY over 5 years within 24 months, fair value contracts by 19.5% under revenue_growth_minus_5pp_5y.4,6
FV impact
-6.1%
Revenue and EPS growth 5 points lower for five years
Trigger
Within 24 months
Cost of capital expansion under higher-for-longer interest rates
Current WACC is 8.45% with risk-free rate at 4.94%. A 100 bps increase in discount rate to 9.45% over 12 months reduces DCF and discounted earnings fair value by 17.0% as modeled in discount_rate_plus_1pp.2
FV impact
-9.4%
Cost of capital 1 point higher
Trigger
Within 12 months
Erosion of member loyalty indicating competitive penetration by mass retailers and loss of customer pricing authority.
Actual:>90%
Alerta siBelow 88% for two consecutive fiscal quarters
03
operating_margin
Inability to absorb freight and commodity inflation through volume expansion, eroding operating profitability.
Stalling international warehouse adoption failing to offset mature domestic market saturation.
Actual:5.6%-7.0%
Alerta siBelow 3.0% YoY for two consecutive fiscal years
Distribution and Depot Infrastructure
— Multi-year capital expenditures of $5.50B in FY2025 expand regional cross-dock depot networks, vertical manufacturing, and logistics automation to sustain throughput advantages.
Moderate
medium
12-24 months
Disciplined capital allocation prioritizing high-traffic metropolitan relocations and modular depot automation pacing.
International expansion execution friction and regional currency volatility
low
24-36 months
Carefully staged international rollouts with localized merchandise curation and joint-venture distribution infrastructure.
Limitation: Terminal value is 63.1% of this model's value, above the 60% level at which the methodology flags concentration; the value leans on the years beyond the explicit forecast.
Project EPS through the explicit advantage period, fade growth as competition catches up, and discount the full stream at cost of equity.
Limitation: Terminal value is 61.7% of this model's value, above the 60% level at which the methodology flags concentration; the value leans on the years beyond the explicit forecast.
Limitation: Terminal value is 64.2% of this model's value, above the 60% level at which the methodology flags concentration; the value leans on the years beyond the explicit forecast.
Depot automation and supply chain efficiencies relieve warehouse congestion and unlock operating cash flow.
In the bull outcome, assigned a 20.0% probability, the shares reach Potential value at $571.07, offering an implied return of -36.2% relative to $895.31. This scenario requires international warehouse rollouts to accelerate with operating margins exceeding domestic units, rapid executive tier penetration in Asian markets, and significant freight productivity from automated depots. This path would be disconfirmed if international opening schedules stall or if gross margins continue to face compression from staple price reductions.
Actual
Modest contraction reflecting deliberate investments in member pricing across food staples and freight headwinds.
Por qué importa
Fluctuations reveal whether management must sacrifice profitability on staple categories to maintain customer price perception against mass merchants.
ActualExpansion continuing across Canadian and overseas metropolitan markets with strong initial membership uptake.
Por qué importa
International warehouses generate higher operating margins than domestic units, driving positive margin mix shifts as global presence expands.
05
Métrica:
New Member Acquisition and Executive Tier Penetration
ActualUnderlying member growth remains solid when adjusting for foreign exchange, supported by strong executive tier adoption.
Por qué importa
New member additions feed comparable store sales growth as shoppers ramp warehouse visits, while executive tier upgrades drive higher average basket sizes.
