Costco Wholesale (NASDAQ: COST), the membership-based wholesale retailer, is experiencing a notable resurgence in its stock value, recently trading near $1,000 per share after a robust 15% rise this year, significantly outpacing the S&P 500. While the company’s impressive performance raises questions about whether its shares are undervalued or if the recent growth complicates investment timing, the underlying fundamentals present a mixed picture.
The company continues to demonstrate strong operational execution, particularly reflected in solid comparable sales trends. In its latest monthly report, Costco reported a 9.3% increase in net sales year-over-year for the four-week retail month ending February 1, 2026, amounting to $21.3 billion. For the first 22 weeks of the fiscal year, net sales rose 8.5% to $123.2 billion. Moreover, the company’s comparable sales, a key metric that measures sales from locations open for over a year, indicated a strong performance with a total of 7.1% recorded for January. When accounting for fluctuations in gasoline prices and foreign exchange, the comparable sales decrease to 6.4%.
Digital growth is particularly promising, with digitally enabled sales soaring by 34.4% in January, compared to adjusted growth of 18.3% in December. This acceleration in e-commerce reflects the company’s adaptability and robustness against competitors like Amazon, which has raised concerns among investors. Costco’s fiscal first-quarter results also indicate stable growth, with net sales climbing 8.2% year over year to $66.0 billion and membership fees growing at 14%.
However, the stock’s current valuation poses a significant risk. Trading at approximately 53 times earnings, such a high multiple suggests that investors are anticipating continued strong growth without any setbacks. A slowdown in sales or increased competition could impact Costco’s future performance, leaving little room for error in its stock price.
Considering these factors, potential investors may want to exercise caution. Analysts believe that a price point of around $830 per share would present a more attractive entry for new investors compared to the current valuation near $1,000. Furthermore, notable analyst recommendations point to other top stocks currently offering more compelling investment opportunities than Costco.
In light of Costco’s solid sales performance and ongoing digital growth, the company is well-positioned for long-term success. Yet, the high valuation metrics signal that prospective investors should approach with care, ensuring they have adequate margins of safety in their investment choices. While Costco remains a strong contender in the retail sector, the future will depend on its ability to maintain growth against a backdrop of intensifying competition.