Costco makes progress on a key membership metric. Here's our new price target on the stock
Costco's membership renewal rates moved in the right direction. But the debate isn't totally settled just yet.
TL;DR
- Costco's Q4 revenue of $95.72 billion and adjusted EPS of $6.75 exceeded Wall Street expectations.
- Membership fee income grew 7.3% to $1.85 billion, slightly below estimates.
- Worldwide and U.S./Canada membership renewal rates improved slightly quarter-over-quarter.
- Executive membership reached an all-time high of 42.3 million members.
- Younger shoppers (under 40) are a growing segment of the membership base, showing significant growth since COVID-19.
- AI referrals are showing high conversion rates, with Costco memberships being a top search result.
- The gas business had a record year, saving members an estimated $3.2 billion.
- Comparable sales rose 9.4%, driven by traffic and ticket size increases.
- Digitally enabled comparable sales increased by 19.5%.
- Costco opened 12 new warehouses in Q4 and plans to open 28 more in fiscal 2027.
- Analysts reiterated a 'hold-equivalent' rating and lowered the price target to $1,050 from $1,100.
- Concerns remain regarding slowing membership growth rates and the stock's premium valuation.