Costco Wholesale Corporation (COST) Stock Valuation — PE Analysis
Discount Stores · NASDAQ
Current Price
$982.08
PE Ratio (TTM)
47.3x
Intrinsic Value
$1,062.94
+7.6% margin of safety
COMPETITIVE MOAT
↑Membership Model Creates Sticky Customer Base
Costco's annual membership fee creates a powerful recurring revenue stream and fosters significant customer loyalty. This model locks customers into the ecosystem, making them less likely to shop elsewhere.
↑Unmatched Buying Power and Low-Price Leadership
Its immense scale allows Costco to negotiate exceptionally favorable terms with suppliers. This purchasing power translates directly into consistently low prices for members, a key differentiator.
↑Efficient Operations and Treasure Hunt Experience
Costco's no-frills warehouse model and limited, rotating product selection drive operational efficiency. This 'treasure hunt' appeal keeps customers engaged and encourages frequent visits.
INVESTMENT RISKS
↓Dependence on Membership Renewal Rates
A significant decline in membership renewal rates could directly impact revenue and profitability. Any perceived decrease in value or increase in fees could trigger this.
↓Limited Product Assortment Can Be a Double-Edged Sword
While driving efficiency, the curated selection means Costco may miss out on broader consumer trends or specific product demands that competitors cater to.
↓Geopolitical and Economic Instability
Global events, trade wars, or economic downturns can disrupt supply chains, increase operating costs, and reduce consumer discretionary spending, impacting sales.
Base case
COST base case PE valuation
At a current price of $982.08, the base case PE valuation puts COST fair value near $1,062.94 per share. That figure assumes 9.5% yearly earnings growth, a target PE multiple of 47.49x, and a 10% discount rate.
Intrinsic Value
$1,062.94
Margin of safety
+7.6%
Expected annual return
+1.6%
Base case assumptions: 9.5% annual earnings growth, 47.49x target PE, 10% discount rate, 5 year projection. Data as of 2026-10-28.
This base case uses default assumptions and is not financial advice. The fair value changes significantly when the target PE or earnings growth rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the COST PE valuation
Adjust the target PE, earnings growth, and discount rate to see how the fair value and margin of safety for Costco Wholesale Corporation respond.
Open PE Calculator for COSTCompany Overview
Costco Wholesale Corporation, alongside its group entities, operates membership-based retail warehouses across a broad international scope, spanning the United States, Puerto Rico, Canada, the United Kingdom, Mexico, Japan, South Korea, Australia, Spain, France, Iceland, China, and Taiwan. These outlets provide customers with an extensive array of both well-known branded and proprietary private-label products. Their vast inventory includes household staples, shelf-stable groceries, confectionery, chilled and frozen items, alcoholic beverages, tobacco, and deli selections. Furthermore, the stores stock major appliances, consumer electronics, health and beauty aids, hardware, garden and patio furniture, sporting goods, vehicle tires, toys, seasonal merchandise, office supplies, automotive maintenance products, postage services, event tickets, apparel, small kitchen appliances, home furnishings, domestic textiles, kitchenware, custom-order kiosks, and fine jewelry. Fresh departments offer meat, produce, a service deli, and bakery items. Beyond retail goods, Costco provides in-store amenities such as pharmacies, optical clinics, food courts, hearing aid centers, and tire installation facilities, in addition to managing 636 gas stations. The company also extends its offerings online through business delivery, travel booking, and same-day grocery fulfillment in various countries. As of August 29, 2021, Costco maintained a global network of 815 membership warehouses, with 564 located in the United States and Puerto Rico, 105 in Canada, 39 in Mexico, 30 in Japan, 29 in the United Kingdom, 16 in South Korea, 14 in Taiwan, 12 in Australia, 3 in Spain, and one each in Iceland, France, and China. Digital storefronts facilitate e-commerce operations in the United States, Canada, the United Kingdom, Mexico, South Korea, Taiwan, Japan, and Australia. Founded in 1976, the enterprise was originally known as Costco Companies, Inc. before officially adopting the name Costco Wholesale Corporation in August 1999. Its corporate headquarters are situated in Issaquah, Washington.
Financial Metrics — COST PE Stock Valuation Data
PE Ratio (TTM)
47.3x
PEG Ratio
3.41
Earnings Yield
2.11%
ROE (TTM)
28.0%
Revenue/Share (TTM)
$682.82
Dividend Yield
0.56%
Debt/Equity
0.24x
Frequently Asked Questions
What is the PE ratio of COST?
The trailing twelve-month PE ratio of COST reflects how much investors pay per dollar of Costco Wholesale Corporation's earnings. This metric is most useful when compared to Discount Stores peers and the company's own historical range.
Is COST overvalued based on PE ratio?
COST's PE of 47.3x combined with a PEG ratio of 3.41 provides a growth-adjusted perspective. A PEG above 2.0 means the P/E is high relative to the earnings growth rate. Keep in mind that PE-based valuation works best for profitable, mature companies — for high-growth or cyclical Discount Stores, a DCF analysis may be more appropriate.
How do I value COST stock using PE ratio?
To value Costco Wholesale Corporation using PE: (1) Compare the current PE (47.3x) against the Discount Stores median to assess relative pricing, (2) check the PEG ratio (3.41) to adjust for growth expectations, (3) review the 5-year PE range to identify where the stock sits historically, and (4) estimate fair value by multiplying a target PE by forward EPS estimates. This relative approach complements DCF's absolute valuation.
What is the PEG ratio of COST?
COST's PEG ratio is 3.41, calculated by dividing the PE ratio (47.3x) by the expected earnings growth rate. A PEG above 2.0 means the P/E is high relative to the expected earnings growth rate. Note that PEG accuracy depends on the reliability of growth estimates.
Should I use PE ratio or DCF for COST stock valuation?
PE ratio gives a quick relative read — how COST is priced versus Discount Stores peers. DCF provides an absolute value based on projected free cash flows. For COST, with a strong ROE of 28.0%, both methods are worth using — PE for a market-relative check, DCF to stress-test whether fundamentals justify the price. Each method has blind spots: PE ignores capital structure and cash flow quality, while DCF is sensitive to growth and discount rate assumptions.
Learn More
- See COST DCF Valuation → — Intrinsic value via Discounted Cash Flow analysis
- PE Methodology — Step-by-step guide to PE ratio stock valuation
- DCF Methodology — Guide to discounted cash flow analysis
- PE Ratio — Understanding the price-to-earnings ratio
- Intrinsic Value — How to evaluate stock fair value
Related PE Valuations
All Consumer Defensive valuationsP/E and DCF value COST with different methods and assumptions, so the two conclusions can differ. Compare the DCF intrinsic value.
Price as of 2026-10-28. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.