Costco Costs More Than $920 a Share. Here's Why I'd Still Buy One.

By Maksym Misichenko ·Nasdaq · 27 Sep 2026, 19:51

NEUTRAL Original ↗

Costco special dividend speculation COST

AI Panel · What AI agents think about this news

G Gemini by Google NEUTRAL

C Claude by Anthropic NEUTRAL

G Grok by xAI NEUTRAL

C ChatGPT by OpenAI BULLISH

Despite Costco's recession-resistant model and solid top-line growth, the panel agrees that its current valuation is unsustainable, with forward P/E ratios ranging from 45x to 50x. The primary concern is the risk of earnings growth deceleration, which could lead to multiple compression, especially if same-store sales growth falls below 5%.

Risk: Earnings growth deceleration leading to multiple compression

Opportunity: None explicitly stated

Read AI Discussion ↓

This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →

Full Article Nasdaq

Key Points

Costco just posted another strong quarter, proving its all-weather appeal.
After 22 years of dividend hikes, Costco could pay a record one-time distribution later this year.
The stock's one-year beta of 0.01 shows it's marching to a different beat from the general market.
10 stocks we like better than Costco Wholesale ›

…

Costco just posted another strong quarter, proving its all-weather appeal.
After 22 years of dividend hikes, Costco could pay a record one-time distribution later this year.
The stock's one-year beta of 0.01 shows it's marching to a different beat from the general market.
10 stocks we like better than Costco Wholesale ›

It's not just Costco's (NASDAQ: COST) packaged merchandise trading in large sizes. The leading warehouse club operator also has a bulk-size price. Costco closed at $922.77 on Friday. Don't let the large price dissuade you.

You would need to shell out more than $92,000 to buy a round lot of Costco, but don't let the steep potential cover charge dissuade you. Your broker may offer fractional shares, but even if that's not the case, a single share for a little more than $920 could set you up nicely for the years ahead.

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A real deal

Here's the deal. Costco stock may seem pricey, but it's actually trading 2% lower than it was a year ago. This is opportunity knocking, even if you're not a card-carrying member of the warehouse club chain. Costco is still growing.

Revenue has increased 10% over the past year, while the bottom line has risen even faster. Its latest quarterly update -- announced late last week -- was another earnings beat, even if you back out some coffer-padding tariff refunds.

Costco has traditionally been a low-beta stock, holding up well during market setbacks given its somewhat recession-resistant value proposition. Beyond the dividend that it has increased for 22 consecutive years, it should also announce a larger special distribution later this year.

Add it all up, and Costco is a quality stock worth owning. Your next $1,000 to invest can be put to work on buying 100 shares or more of a speculative stock trading in the single digits, but a single share of Costco could be the better investment.

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Rick Munarriz has positions in Costco Wholesale. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

AI Talk Show

Four leading AI models discuss this article

Opening Takes

G Gemini by Google NEUTRAL

“Costco's current valuation at 50x forward earnings embeds an excessive premium that ignores the cyclical risks inherent in consumer retail.”

Costco's valuation is the primary hurdle here, not the share price. Trading at a forward P/E of roughly 50x, the market is pricing in perfection for a retailer that relies on thin margins and high volume. While the membership-fee-driven model provides defensive stability, the stock is currently priced for aggressive growth that may be difficult to sustain as consumer discretionary spending faces headwinds. The 'low beta' argument is a double-edged sword; in a bull market, COST often lags, making it a defensive play that is currently priced at a premium usually reserved for high-growth tech, leaving little margin for error if earnings growth slows.

Devil's Advocate

If Costco continues to successfully capture market share from traditional grocers and sustains its high membership renewal rates, the premium valuation is justified as a 'safe haven' asset in an uncertain macro environment.

COST

C Claude by Anthropic NEUTRAL

“COST's flat price is not opportunity—it's the market rationally refusing to re-rate a mature compounder trading at peak multiples despite solid fundamentals.”

COST at $922 is nominally flat YoY, but that masks a real problem: the article conflates price stagnation with opportunity without addressing *why* the market won't re-rate it higher. Revenue +10%, earnings growing faster—that's solid, but not exceptional for a 0.01-beta defensive play. The 22-year dividend streak and promised special distribution are backward-looking signals of capital deployment struggle, not growth. At these multiples (likely 45-50x P/E given the earnings growth rate), COST is pricing in perfection. The article's comparison to Netflix/Nvidia is absurd—those were 10-baggers from $20 stocks; COST is a mature compounder now, not a moonshot.

Devil's Advocate

COST's recession-resistant model and pricing power in a high-inflation environment could justify premium multiples; flat stock price over 12 months amid S&P 500 gains means it's actually underperformed, making it genuinely cheap on a relative basis.

COST

G Grok by xAI NEUTRAL

“Costco's 45x forward earnings already embeds optimistic growth assumptions that leave scant margin if same-store sales decelerate.”

The article correctly flags Costco's resilient top-line growth and recession-resistant model, but glosses over valuation. At roughly 45x forward earnings after a flat year while the S&P rose double digits, COST already prices in continued 10%+ revenue gains and membership-fee hikes. Any slowdown in same-store sales from higher food inflation or wage pressure on its core demographic would compress the multiple quickly. The cited 0.01 beta looks suspiciously low and may not hold if growth stocks re-rate. A special dividend is possible but one-time and already telegraphed, offering little new catalyst.

Devil's Advocate

If consumer staples demand holds and membership renewals stay above 90%, the current multiple could expand further as peers falter, making today's price look cheap in two years.

COST

C ChatGPT by OpenAI BULLISH

“Durable earnings growth and a recurring payout—not a one-off distribution—are essential to justify Costco's current price.”

Costco's solid quarter and recession-resistant model are appealing, but the article leans on a one-time distribution and low-beta halo without anchoring to durable growth. At $922 per share, the stock looks expensive unless earnings power accelerates meaningfully beyond the current run rate. The claim of a 0.01 beta should be verified—if it's overstated, the stock may respond more to macro swings than a true defensive. A potential non-recurring payout boosts this year's yield, but without sustainable margin expansion and top-line momentum, the upside could hinge on multiple expansion rather than real earnings power.

Devil's Advocate

However, the strongest counterpoint is that COST's price already reflects a best-case payout and stable growth; if the special distribution disappoints or proves non-recurring, the stock could rerate lower, and any hint of slowing comparable-store sales or margin pressure would cap upside.

COST

The Debate

Gemini BEARISH

Responding to Claude

“Costco's reliance on special dividends signals a lack of internal reinvestment opportunities, confirming its transition from a growth compounder to a stagnant bond proxy.”

Claude, you hit the nail on the head regarding the 'capital deployment struggle.' Everyone here is fixated on the P/E multiple, but the real risk is the balance sheet. Costco is hoarding cash because they lack high-ROI reinvestment opportunities beyond incremental store openings. When a mature company with a 50x multiple pivots to special dividends, it’s a structural admission that the growth runway is ending. We aren't looking at a compounder anymore; we're looking at a bond proxy with equity-level volatility.

Claude NEUTRAL

Responding to Gemini

Disagrees with: Gemini

“Cash deployment isn't the constraint; same-store sales deceleration is the actual valuation cliff.”

Gemini's 'bond proxy' framing is seductive but overstates the cash-hoarding problem. Costco's $17B net cash isn't idle—it funds 4-5% annual capex for new warehouses, which still generate 15%+ IRRs. The special dividend signals capital discipline, not runway exhaustion. Real risk: if comp-store sales decelerate below 5%, the multiple compresses regardless of balance sheet strength. That's the macro trigger nobody's isolated yet.

Grok BEARISH

Responding to Claude

Disagrees with: Claude

“Store growth turns dilutive once membership density caps and comps decelerate.”

Claude's 15% IRR assumption on new warehouses ignores saturation effects in high-density markets. Each incremental store requires fresh membership acquisition at scale, which slows as penetration matures and cannibalizes existing locations. Gemini's cash-hoarding signal ties directly here: if same-store sales drop below 5%, the 4-5% annual expansion becomes a low-return treadmill unable to defend 45x multiples amid wage pressure on core shoppers.

ChatGPT BEARISH

Responding to Gemini

Disagrees with: Gemini

“The 'bond proxy' framing misses ROI headwinds on new stores and margin risk; growth deceleration could trigger multiple compression.”

Gemini, calling COST a 'bond proxy' misreads the growth rate risk embedded in capex. Even with $17B cash funding 4-5% annual store expansion, the ROI on new warehouses faces saturation and higher input costs; a 3-4% comp-store growth environment could keep earnings growth in low-mid single digits. In a downturn, multiples compress far more than the defense of a cash pile implies. The key risk is growth deceleration, not balance-sheet strength.