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Is There Now An Opportunity In Costco Wholesale Corporation (NASDAQ:COST)?

Simply Wall St · 3d ago

Today we're going to take a look at the well-established Costco Wholesale Corporation (NASDAQ:COST). The company's stock received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$955 at one point, and dropping to the lows of US$850. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Costco Wholesale's current trading price of US$855 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Costco Wholesale’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

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Is Costco Wholesale Still Cheap?

According to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average, the stock currently looks expensive. We’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 45.69x is currently well-above the industry average of 22.83x, meaning that it is trading at a more expensive price relative to its peers. In addition to this, it seems like Costco Wholesale’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

Check out our latest analysis for Costco Wholesale

Can we expect growth from Costco Wholesale?

earnings-and-revenue-growth
NasdaqGS:COST Earnings and Revenue Growth January 5th 2026

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 33% over the next couple of years, the future seems bright for Costco Wholesale. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? It seems like the market has well and truly priced in COST’s positive outlook, with shares trading above industry price multiples. At this current price, shareholders may be asking a different question – should I sell? If you believe COST should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on COST for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive outlook is encouraging for COST, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing Costco Wholesale at this point in time. While conducting our analysis, we found that Costco Wholesale has 1 warning sign and it would be unwise to ignore it.

If you are no longer interested in Costco Wholesale, you can use our free platform to see our list of over 50 other stocks with a high growth potential.