Costco Stock Rises⁢ After Solid Q3 Earnings Report

⁣ ⁢ Updated⁤ May 31, 2025
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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.