Shares of Costco Wholesale Corp (NASDAQ:COST) tanked in early trading on Friday, after the company on Thursday reported its fiscal third-quarter results.
The Issaquah, Washington-based company reported strong sales and earnings growth, with its performance being broadly consistent across geographies, according to BTIG analyst Robert Drbul.
The Costco Wholesale Analyst: Drbul reiterated a Buy rating and price target of $1,125.
The Costco Wholesale Thesis: The bulk retailer’s net sales grew 11.6% year-on-year to $69.2 billion, while adjusted earnings rose around 15% to $4.93 per share, beating BTIG's estimate of $4.86 per share, Drbul said in the note.
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Comparable sales grew 9.8%, or 6.6% ex-gas and ex-FX, with traffic rising 2.4% and ticket up 7.3%, he added.
"From a regional and category perspective, adjusted comps were broadly consistent across geographies with the U.S. +6.8%, Canada +6.2%, and Other International +5.9%," the analyst wrote, while adding that digitally-enabled comps grew by a healthy 21.5%.
Drbul further noted:
- Membership fee income grew 10.7% to $1.37 billion, supported by paid members of 82.9 million, which was up 4.1% year-on-year.
- Renewal rates improved sequentially to 92.2% in the US and Canada, and 89.7% worldwide. This represented the first sequential growth since the second quarter of 2025. Gains were driven by improved retention of digitally signed members and a continued shift in mix toward higher-value executive memberships.
Gross margin contracted 21 basis points (bps) year-on-year to 11.04%, "heavily influenced by gas dynamics," the analyst stated.
"The quarter saw record gas volumes and increased engagement, with new members utilizing gas for the first time, which tends to drive higher long term spend and renewal rates," he further wrote.
Costco Price Action
Shares of Costco Wholesale had declined by 4.65% to $948.95 at the time of publication on Friday.
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