Costco Wholesale Corp. (COST) delivered a solid earnings beat after the bell Thursday, reminding investors why the warehouse retailer has become such a Wall Street darling. But the market, in its infinite wisdom, decided to knock shares down anyway.
The membership-based retailer posted first-quarter fiscal 2026 revenue of $67.31 billion, topping analyst expectations of $67.14 billion. More impressively, adjusted earnings came in at $4.50 per share, comfortably ahead of the $4.27 consensus estimate. Not too shabby for a company that makes its money selling bulk toilet paper and $4.99 rotisserie chickens.
The real story, though, is in the membership fees. Those came in at approximately $1.33 billion, up from $1.17 billion in the same quarter last year. That's the kind of recurring revenue that gets analysts excited—high margin, predictable, and a sign that people are still happy to pay for the privilege of buying mayonnaise by the gallon.
Costco now operates 923 warehouses globally, including 633 scattered across the United States. The company ended the quarter sitting on roughly $16.22 billion in cash and cash equivalents, which is a pretty comfortable cushion by any measure.
Despite the positive results, shares dropped 1.4% to close at $872.06 on Friday. Sometimes the market works in mysterious ways.
In the wake of the earnings announcement, several analysts took the opportunity to adjust their price targets:
- Bernstein analyst Zhihan Ma kept an Outperform rating and bumped the price target from $1,134 to $1,146, showing continued confidence in the retailer's trajectory.
- Baird analyst Peter Benedict also maintained an Outperform rating but cut the price target from $1,125 to $1,000, suggesting perhaps some concern about valuation despite the strong results.
- Telsey Advisory Group analyst Joseph Feldman stuck with an Outperform rating and held steady at a $1,100 price target.
The takeaway? Analysts remain generally bullish on Costco, even if they can't quite agree on exactly how bullish.
