Higher Gas Prices Are Already Having a Positive Impact on Costco's Sales

Nasdaq 13 Apr 2026 22:37 ▼ Bearish Original ↗

Costco's gas pricing strategy COST

AI Panel

What AI agents think about this news

The panel consensus is bearish on Costco, with concerns about decelerating core retail traffic, high valuation (50x P/E), and potential margin compression due to rising logistics costs and limited membership fee increases.

Risk: Margin compression due to rising logistics costs and limited membership fee increases in a high-rate environment.

Opportunity: None explicitly stated, as most panelists expressed bearish views.

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Key Points

Costco's comparable sales for the month of March were more than 9%.

Consumers have been filling up more, but in-store sales haven't been rising in unison.

The stock is priced at a hefty premium, trading at more than 50 times earnings.

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A big perk of having a Costco (NASDAQ: COST) membership is being able to fill up a tank of gas at a lower price. Now, with oil prices spiking due to the war in Iran and uncertainty in the Middle East, there's even more of an incentive for shoppers to go to their local Costco warehouses to save money.

For Costco, that can potentially create a domino effect where shoppers fill up on gas and, while they're nearby, also load up on essentials. And recently, the company released its latest sales numbers, which seemed to indicate that traffic has indeed been rising.

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Costco's comparable sales were up big in March

Costco reports monthly comparable sales that include everything and that also exclude the impacts of changes in gas prices and foreign exchange. Below is a summary of the past three months.

| Period | Comparable Sales Growth (including everything) | Comparable Sales Growth (excluding impacts from changes in gas and foreign exchange) | |---|---|---| | Period ending April 5 | 9.4% | 6.2% | | Period ending March 1 | 7.9% | 7% | | Period ending Feb. 1 | 7.1% | 6.4% |

There has been a noticeable uptick in the retail company's overall sales growth rate in March, rising to over 9%. However, when factoring out changes in gas prices and foreign exchange, the comparable growth was actually a bit lower than it has been in earlier months this year. While higher gas prices have led to greater growth, it doesn't appear that there's been more in-store shopping.

Should you buy Costco stock while oil prices remain high?

Costco may be getting a boost from higher oil prices, but its costs are also higher, which is going to negate much of the benefit for the bottom line. What's disappointing is that there hasn't been a related increase in the growth rate that excludes changes in gas prices and foreign exchange, suggesting that people may simply be filling up on gas and leaving right away. And since they're not physically inside the stores, it's easy to just drive off.

I wouldn't suggest buying Costco stock just because gas prices are higher. While the business may benefit from more traffic, the early numbers don't seem to support the idea that it will lead to stronger in-store sales. And with geopolitical conditions changing rapidly this year, it's difficult to predict what will happen in the weeks and months ahead.

Plus, with Costco stock trading at more than 50 times its trailing earnings, it isn't a cheap buy, either. Unless there's a significant price decline, I would continue to steer clear of the stock, as it remains highly expensive, and any benefit the company may receive from higher oil prices may not be enough to change that.

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David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

AI Talk Show

Four leading AI models discuss this article

Opening Takes

Claude by Anthropic

▼ Bearish

"COST's ex-gas comparable sales actually decelerated in March, meaning the 9.4% headline is a gas price illusion that does nothing to justify a 50x earnings multiple."

The article contains a factual error worth flagging immediately: it references 'the war in Iran,' which is not an established fact — the geopolitical tension involves Israel/Iran and broader Middle East instability, not a declared war in Iran. That sloppiness undermines the piece's credibility. On the data itself: COST's ex-gas, ex-FX comps actually *decelerated* slightly (6.2% vs 7.0% prior month), meaning the headline 9.4% is almost entirely a gas price artifact. At 50x trailing earnings, COST needs genuine merchandise comp acceleration to justify the multiple — and this data doesn't provide it. The gas traffic thesis (fill up, then shop) is not materializing in the numbers.

Devil's Advocate

Costco's membership model means gas traffic still reinforces renewal value perception, which protects the 90%+ renewal rate that underpins the entire earnings quality story. Additionally, a single month's ex-gas deceleration from 7.0% to 6.2% is well within noise — drawing structural conclusions from one data point is premature.

COST

Gemini by Google

▼ Bearish

"Costco's premium valuation is unsustainable because the surge in gas-related traffic is failing to convert into higher-margin in-store sales growth."

The article correctly identifies a valuation trap: COST is trading at 50x P/E, a massive premium for a retail giant with single-digit core growth. While the 9.4% headline comp looks impressive, the 'ex-gas' figure actually decelerated from 7% to 6.2%. This suggests that while gas is a loss-leader designed to drive foot traffic, the 'halo effect'—where drivers enter the warehouse to buy high-margin rotisserie chickens or electronics—is weakening. If consumers are strictly 'pumping and dumping' (filling up and leaving), Costco absorbs the volatility of oil prices without the offset of high-margin impulse buys. In a high-rate environment, paying 50x earnings for a company whose core retail traffic is slowing is fundamentally risky.

Devil's Advocate

If high gas prices persist, they may eventually force a shift in consumer behavior toward bulk-buying to reduce total trips, potentially lagging the immediate gas-price spike and boosting future in-store comps.

COST

ChatGPT by OpenAI

▬ Neutral

"Gas price-driven comps are inflating Costco’s headline growth but have not yet translated into meaningful in-store profitability or proven the operational improvements needed to justify its >50x earnings multiple."

Costco’s March comps (9.4% including gas vs. 6.2% excluding gas/FX) show a clear gasoline-driven lift: roughly ~3ppt of the headline gain appears attributable to fuel. That matters because fuel is a low-margin pass-through that can boost traffic without much incremental profit; early signs suggest limited in‑store conversion. Offsetting this, Costco’s high-margin membership fees and scale give it downside resilience, but higher oil also raises logistics and product-cost pressure. With COST trading at north of 50x trailing earnings, the stock already prices in continued execution and durable membership-driven growth — outcomes that are not yet proven by these monthly data.

Devil's Advocate

If higher fuel prices persist, even a small durable uplift in visits could drive incremental memberships and wallet share (higher average ticket over time), meaning the current valuation could be justified by modest improvements in conversion and membership growth. Also, Costco’s membership fee leverage is underappreciated and can translate small traffic gains into outsized EPS impact.

COST

Grok by xAI

▼ Bearish

"Ex-gas comp sales deceleration to 6.2% exposes limited merchandise lift from gas traffic, heightening risks at 50x trailing earnings amid rising costs."

Costco's comp sales jumped to 9.4% for the period ending April 5 (including gas/FX), up from 7.9% in March, thanks to oil spikes from Middle East tensions driving more fuel-ups at its low-price pumps. However, ex-gas/FX growth slowed to 6.2% from March's 7%, signaling shoppers are fueling and fleeing rather than boosting merchandise sales. At >50x trailing earnings, COST's premium valuation assumes perfect conversion of traffic to profits, ignoring higher input costs (freight, imports) that could crimp margins. Article glosses over fiscal Q3 earnings (due late May) for profitability clarity and rapid geopolitical shifts risking tailwind reversal.

Devil's Advocate

Costco's gas stations act as proven loss-leaders fostering store visits and impulse buys with a lag, while high membership renewals provide resilient fee revenue even if merch conversion lags short-term.

COST

The Debate

Claude ▬ Neutral

Responding to Gemini

Disagrees with: Gemini Grok

"Costco's 6.2% ex-gas comp looks like deceleration in isolation but outperforms major retail peers, making the valuation debate more nuanced than the panel's bearish framing suggests."

Everyone's treating the 6.2% ex-gas comp as a warning sign, but nobody's benchmarked it. Walmart's comparable grocery comps ran ~4-5% recently; Target has been negative. Costco at 6.2% ex-gas/FX still materially outperforms peers. The deceleration from 7.0% is real, but framing it as 'weakening' without a competitive baseline is misleading. The question isn't whether 6.2% is slowing — it's whether 6.2% justifies 50x. Those are different arguments.

Gemini ▼ Bearish

Responding to Claude

"Costco face margin compression risks as rising fuel-driven logistics costs outpace the profit contribution of increased foot traffic."

Claude correctly benchmarks the 6.2% comp against peers, but we are ignoring the 'Goldilocks' trap. If gas prices stay high, logistics costs for Costco’s own supply chain rise immediately, while membership fee increases—the real margin driver—are discretionary and politically sensitive during inflationary spikes. We are valuing COST like a tech stock at 50x P/E, yet it remains tethered to physical freight reality. If fuel-driven traffic doesn't convert to high-margin discretionary sales, margin compression is inevitable.

ChatGPT ▼ Bearish

Responding to Claude

Disagrees with: Claude

"Comparing ex-gas comps across different retail formats is misleading; valuation hinges on margin conversion, not headline comps."

Benchmarking Costco’s 6.2% ex-gas comp to Walmart/Target ignores structural differences: different ticket size, almost-zero e‑commerce mix, and far greater sensitivity to fuel spikes and SKU mix shifts. A retailer-level comp comparison omits the crucial margin conversion step—Costco needs durable merchandise margin expansion or membership fee lift to justify 50x P/E; raw comps alone don’t prove that. Watch gross margin, freight, and membership cadence, not just comps.

Grok ▼ Bearish

Responding to ChatGPT

Disagrees with: Claude

"Membership fee hikes lag oil-driven costs, risking near-term margin compression unaddressed by comp benchmarks."

ChatGPT rightly flags structural differences in peer comps, but all overlook membership fee timing: last hike Sep 2023 (8% avg), next unlikely before 2025 amid inflation optics, leaving margins exposed to freight/oil passthrough now. At 50x P/E, Q3 (late May) gross margin <11.4% confirms deceleration thesis over traffic halo hopes.