Costco‘s Q3 earnings valuation problem came into sharp focus Thursday when shares fell roughly 4% despite the company posting record revenue of $70.53 billion for the 12 weeks ended May 10, 2026.
| Metric | Q3 FY2026 | vs. Prior Year / Estimate |
|---|---|---|
| Net Sales | $69.15B | +11.6% YoY ($61.96B prior year) |
| Total Revenue (incl. membership) | $70.53B | Beat $69.68B consensus |
| EPS (diluted) | $4.93 | Missed $4.98 estimate; $4.28 prior year |
| Comparable Sales (headline) | +9.8% YoY | Highest in 2+ years |
| Comparable Sales (ex-gas, ex-FX) | +6.6% YoY | Middle of 2-year range |
| Digital Comparable Sales | +21.5% YoY | Not in consensus estimate |
Record Revenue, EPS Miss, and the Costco Q3 Earnings Valuation Gap
Net income rose 15.2% to $2.19 billion from $1.90 billion a year earlier, according to the company’s 8-K filing. But EPS of $4.93 came in under the $4.98 analyst consensus, a small miss that carries more weight when the stock is priced for perfection.
Trading near 47x forward earnings and around 50x trailing earnings on NASDAQ, COST leaves no margin for anything short of a blowout. “Good but not great” quarters get sold. That’s the math here.
The 9.8% headline comparable sales figure looks strong. Strip out gasoline inflation and currency effects, and the number falls to 6.6%, a result that lands squarely in the middle of the past two years of data. Gas volumes from the final five weeks of the quarter ranked among the five highest in company history, driven by multi-year high pump prices tied to the Iran conflict. Wholesale clubs like Costco price fuel 10 to 30 cents below independent stations, making them a natural beneficiary of price spikes. But that tailwind inflates the headline comp and does not reflect underlying unit volume growth.
Digital comparable sales hit +21.5% for the quarter, a number that did not make the headline wire. That figure matters for the long-term margin and membership story, even if the market was focused on the EPS line Thursday morning.
Membership Fees and the Costco Q3 Earnings Valuation Thesis
Total membership growth was 4.1%. Executive tier members now total 41.2 million. Membership fees are the real engine of Costco’s margin structure, since merchandise gross margins are thin by design. Fee growth needs to keep compounding to justify the multiple investors pay for this stock.
The Costco investor relations page confirmed the quarterly dividend was raised from $1.30 to $1.47 per share, a 13.1% increase. Per the dividend 8-K, the raise was declared April 15, 2026, and paid May 15 to holders of record as of May 1. The annualized dividend now runs $5.88. There is also speculation a special dividend could materialize before fiscal year-end, as Costco has done before when cash piles up.
Tariff uncertainty adds a wildcard. Management confirmed Costco has begun submitting claims through U.S. Customs and Border Protection for IEEPA tariff refunds, with approvals expected on a rolling basis. But the timeline depends on litigation developments and CBP processing speed, two variables management cannot control. New temporary tariffs imposed in the interim have complicated the picture further.
Chart Setup and the Costco Q3 Earnings Valuation Range
Shares are still up more than 10% year-to-date. Most of that gain landed in the first few weeks of January, and the stock has spent most of the period since then grinding sideways between $950 and $1,050.
The all-time high of $1,094, printed May 19, was followed by six consecutive red sessions. The Relative Strength Index has crossed below 50, entering bearish territory. A January Golden Cross kept the 50-day moving average above the 200-day, preserving long-term trend structure, but near-term momentum has clearly faded.
The Costco Q3 earnings valuation debate has a simple framing: the stock needs the business to accelerate, not just perform. At nearly 50x earnings, a solid quarter with a slight EPS miss and a comp that flatters under the surface is not a catalyst. It is a reason to wait.
The next test is fiscal Q4, which ends in late August. If tariff refunds start flowing and digital comps stay above 20%, the earnings story gets more interesting. Watch the $950 level as near-term support; a close below it reopens the $900 range seen in late 2025.
