Costco stock (COST) climbed 3% to $1,040 after a strong Q3 earnings report, driven by notable revenue and membership fee growth, solidifying its performance despite growing tariff concerns. The retail giant’s revenue increased 8% to $63.2 billion, exceeding expectations, with comparable store sales up 5.7%. News directory 3 highlights how CEO Ron Bakris addressed strategies to mitigate tariff impacts, showcasing Costco’s resilience.with digital sales also surging 15%, and a rising number of paid memberships, the company’s long-term prospects appear bright.However, a high price-to-earnings ratio warrants investor attention. Discover what’s next for Costco—and its stock—as the year progresses.
Costco Stock Rises After Solid Q3 Earnings Report
Updated May 31, 2025
Costco’s stock (COST) experienced a 3% surge, reaching $1,040 per share following a robust fiscal third-quarter earnings announcement. Year-to-date, Costco stock is up approximately 14%.
Teh big box retailer surpassed both earnings and revenue expectations, demonstrating growth despite tariff pressures. Revenue climbed 8% to $63.2 billion, edging past the estimated $63.1 billion. Net income saw a 13.1% increase, reaching $1.9 billion, or $4.28 per share, exceeding analyst predictions of $4.24 per share.
Net sales increased 8% to roughly $62 billion, while membership fees experienced an 11% rise, totaling $1.24 billion. Costco’s comparable store sales also showed strength, increasing by 5.7%. In the U.S., thes sales rose 6.6% year-over-year, while canada saw a 2.9% increase,and other international markets experienced a 3.2% rise. Excluding gas sales, comparable store sales increased 8%. Digital sales also jumped, rising 15% during the quarter.
Paid memberships increased by 7% to 79.6 million, with a worldwide renewal rate of 90.2%. Costco is on track to open 24 new stores this fiscal year, with 15 already operational. The company also plans to relocate three existing stores.
Limiting Tariff Impact
CEO Ron Bakris addressed how Costco managed to mitigate the impact of tariffs during the earnings call.
Bakris said, “We’re remaining agile as the situation with tariffs evolves, while also supporting the commitments we’ve made with our long-term suppliers. As an example of this, during the third quarter, we rerouted many goods sourced from countries with large tariff exposure to our non-U. S.markets. In The U. S., we pulled forward some items that we had planned for the summer and sourced additional locally produced goods to reduce tariff impacts and ensure that we were in stock.”
Costco imports approximately one-third of its products into the U.S., with about 8% originating from China, potentially giving it less tariff exposure compared to other major retailers. The majority of these imports are non-food items.
Higher inflation in non-food items led to a $130 million LIFO charge, affecting earnings and gross margin. CFO Gary Millerchip explained that the LIFO charge is calculated by comparing the “net landed cost of inventory at the begining of the fiscal year with the net landed cost of inventory on hand at the end of the current quarter.”
Millerchip also noted that if the current inflation rate persists, Costco could face an additional $40 million to $50 million LIFO charge in the fourth quarter.
Following the Q3 earnings release, Costco received several price target upgrades, including a $75 increase from Morgan Stanley and a $47 increase from Truist. The median price target for Costco stock is $1,088 per share, suggesting a potential 7% increase from its current price.
What’s next
While Costco’s stock is up 14% year-to-date, its high price-to-earnings ratio of 58 warrants continued monitoring by investors.
