Costco Wholesale reports fiscal fourth-quarter results after the market close today, with Wall Street looking for roughly $94.9 billion in revenue and approximately $6.54-$6.55 in EPS. That would translate into another quarter of double-digit revenue growth and low-double-digit earnings growth, reinforcing the familiar Costco story: resilient traffic, strong spending, expanding digital engagement and an unusually loyal customer base. For investors approaching this Costco earnings preview, however, those headline expectations are only the starting point.
But revenue may not be tonight’s most revealing number. Costco has already disclosed $93.9 billion of fiscal Q4 net sales, up 11.3%, through its monthly sales reporting. That pre-reported net-sales figure is not the same as the full quarterly revenue and earnings picture investors will receive tonight, which adds membership-fee income and the other financial components of the quarter.
The bigger question sits deeper inside the model: is Costco’s membership machine still accelerating economically even as headline member growth normalizes?
That distinction matters beyond one quarter. Q4 will show how much benefit Costco is still extracting from its membership fee increase, while the next two quarters should begin revealing whether Executive upgrades, renewals and organic member growth can sustain the momentum as that pricing benefit becomes a less important comparison.
There is a second question running alongside it. With cash approaching $20 billion and roughly $1.5 billion of U.S. government tariff refunds still to be deployed, tonight also tests what Costco intends to do with the cash its membership model keeps generating.
The Priced-In Scenario: A Costco Earnings Preview
The conventional setup is relatively straightforward. Consensus expectations call for approximately $94.9 billion of revenue and $6.54-$6.55 of EPS, with the already-reported Q4 sales data pointing toward another strong operating quarter.
Costco’s 16-week Q4 net sales increased 11.3% to $93.9 billion, while comparable sales increased 9.4%. U.S. comparable sales were particularly strong at 10.7%, providing investors with considerable visibility into the top line before tonight’s full earnings release. That distinction is important to the Costco earnings preview because the pre-reported $93.9 billion represents net sales, while tonight’s full results provide the broader revenue and earnings picture.
The margin picture is less straightforward. In Q3, reported gross margin declined 21 basis points to 11.04%, although gross margin excluding gas inflation improved by one basis point. Core-on-core margin fell nine basis points as Costco deliberately invested in lower prices on categories including eggs and beef while transportation costs increased.
Management has made clear that those investments are strategic rather than reactionary. Costco’s model depends on reinforcing the value proposition, even when doing so sacrifices some near-term merchandise margin.
That leaves investors expecting a familiar balancing act: strong sales and market-share momentum against Costco’s willingness to reinvest economics into lower prices.
The problem with focusing exclusively on that equation is that merchandise margin is only part of what makes Costco economically different from a conventional retailer.
Membership fees sit underneath the entire model. And tonight’s membership numbers should provide a cleaner indication of whether Costco’s underlying earnings quality is strengthening alongside its sales.
Capital allocation has quietly become part of that expectation. Evercore ISI’s Greg Melich, who reaffirmed a Buy rating and $1,100 price target ahead of the print, flagged Costco’s cash balance nearing $20 billion and roughly $1.5 billion of tariff refunds as reasons he sees growing potential for a special dividend.
The Metric That Actually Matters
The central KPI tonight is membership-fee income.
Costco generated $1.373 billion of membership-fee income in Q3, up 10.7% year over year. More importantly, management said membership income still increased 7% after stripping out foreign exchange and the September 2024 membership fee increase.
That distinction is crucial.
Costco raised U.S. and Canadian Gold Star membership pricing from $60 to $65 and Executive membership pricing from $120 to $130 in September 2024. Because membership revenue is recognized over the membership period, that increase has continued flowing through reported fee income. In Q3, however, management said the higher pricing accounted for only a little more than one-quarter of membership-income growth.
The remainder reflected something potentially more valuable: growth in the membership base and upgrades into Executive memberships.
Costco finished Q3 with 82.9 million paid members, up 4.1%, but Executive memberships increased substantially faster, rising 9.6% to 41.2 million. Management has said Executive members generally visit more frequently and spend more, and they accounted for roughly three-quarters of worldwide sales.
This creates an important divergence heading into tonight. Overall paid-member growth has slowed toward what management describes as a more normalized 4%-5% rate, while the company’s highest-value membership tier continues expanding much faster. That divergence makes the composition of fee growth one of the most useful signals in this Costco earnings preview.
Renewals complete the picture. Costco’s U.S. and Canadian renewal rate improved sequentially to 92.2% in Q3, while the worldwide rate held at 89.7%. Management also said targeted retention initiatives were beginning to offset pressure from online-acquired members, who historically renew at slightly lower rates.
The real earnings mechanism is therefore not simply higher membership pricing—it is acquisition, retention and migration toward higher-value Executive members working together.
If those economics remain strong, Costco can continue using merchandise pricing aggressively to reinforce member value without depending entirely on retail margin expansion to grow profits.
That durability is particularly important at Costco’s valuation. Based on the September 23 multiples supplied by TIKR, the shares trade at approximately 45.5x LTM diluted earnings and 28.1x LTM EBITDA, while the NTM normalized P/E stands around 41.4x.
Those multiples require more than good retail sales. They place considerable value on the durability of Costco’s membership economics.
Costco enters Q4 with much of the sales picture already visible. The more consequential question is whether membership economics remain strong as the benefit from the 2024 fee increase becomes less important, particularly given the company’s premium valuation.
Q4 sales strength is largely visible. The more important test is whether Executive penetration, renewals and organic membership growth can sustain Costco’s economics as pricing tailwinds fade and its premium valuation continues demanding durability.
What An Upside Surprise Would Look Like
The most constructive outcome tonight would not necessarily require a spectacular revenue beat. The reported sales numbers have already removed much of that uncertainty.
A more meaningful upside surprise would come from membership-fee income remaining unusually strong while the underlying composition improves.
If Executive memberships continue growing materially faster than the overall paid-member base, it would suggest Costco is extracting greater economic value from existing members rather than depending primarily on warehouse openings or headline customer acquisition. Stable or improving renewal rates would reinforce that interpretation.
There is also an important organic-growth test. In Q3, membership income increased 7% excluding both the fee increase and FX. Maintaining something close to that underlying trajectory as Costco moves further beyond the September 2024 pricing change would suggest that the membership engine has more than a temporary pricing tailwind behind it.
That could alter how investors interpret otherwise ordinary margin pressure. Costco deliberately uses some of its economic strength to lower prices, increase value and stimulate engagement. Management has repeatedly described that reinvestment as part of the model rather than a deviation from it.
The Q3 gas experience illustrates the mechanism. Costco widened its pricing advantage as fuel prices increased, generating record volumes and bringing some existing members into its gas stations for the first time. Management noted that members who engage with Costco gas historically visit more frequently, spend more and renew at higher rates.
Digital engagement creates another version of the same flywheel. Same-day delivery is growing quickly and is frequently used by Costco’s highest-spending members, while personalized product recommendations have produced conversion rates well above Costco’s normal digital experience.
If membership economics strengthen while Costco continues reinvesting in value, the market could interpret modest merchandise-margin pressure as fuel for the membership flywheel rather than evidence of weakening profitability.
Capital returns could provide a second, less-discussed source of upside. Costco’s membership model generates unusually predictable cash, and the company is entering tonight with a balance sheet that has been building for several quarters.
A special dividend would not change the operating debate, but it would change the interpretation of it. It would signal that management views the cash generated by the membership engine as durable enough to return rather than hold — a different message from a company worried about what happens when the fee-increase comparison disappears.
For a company still carrying a premium earnings multiple, that distinction could matter more to investor psychology than a small EPS beat. It is also why the Costco earnings preview extends beyond the headline revenue comparison.
Where The Downside Case Emerges
The more problematic outcome would be a deceleration in membership economics that cannot be explained primarily by the fading contribution from the fee increase.
Paid-member growth already slowed to 4.1% in Q3, prompting analysts to question whether slower membership acquisition could eventually weigh on comparable sales. Management argued that 4%-5% represents a more normal growth range when Costco is not benefiting from major new international-market entries or extraordinary periods such as the pandemic.
Tonight provides another test of that explanation.
If paid-member growth slows further while Executive membership growth also loses momentum, investors would have less evidence that the composition of Costco’s member base is improving enough to compensate for slower headline acquisition.
Renewal rates would become particularly important in that scenario. Costco has attributed some historical renewal pressure to the increasing proportion of memberships acquired online. Q3 offered an encouraging signal because targeted digital retention efforts more than offset that mix pressure.
A reversal would complicate the story.
The margin backdrop could amplify that concern. Costco’s Q3 core-on-core merchandise margin declined as the company invested in value, while higher healthcare and transportation expenses created additional pressure elsewhere in the income statement. Those investments are easier for investors to tolerate when membership economics are simultaneously strengthening.
The uncomfortable combination would be slower membership monetization occurring at the same time Costco continues sacrificing merchandise economics to preserve its value proposition.
A capital return would not automatically resolve that tension either. Returning cash can be read two ways: as confidence in recurring cash generation, or as an acknowledgment that reinvestment opportunities are becoming harder to find as growth normalizes. At Costco’s multiple, the second reading would matter.
That would not mean the membership model is broken. But at approximately 45.5x trailing earnings and 41.4x forward normalized earnings, investors have less reason to overlook evidence that the model is simply maturing.
The valuation has already compressed substantially. The supplied TIKR data show LTM P/E falling from 58.9x in November 2025 to 45.5x currently, while LTM EV/EBITDA declined from 36.6x to 28.1x. Even after that reset, Costco still commands a valuation that puts considerable weight on durability.
Membership deceleration would therefore matter not just to earnings estimates, but to the assumptions supporting that premium. That tension remains an important counterweight in this Costco earnings preview.
Beyond Tonight’s Print
The next two quarters may ultimately tell investors more about Costco than Q4 itself.
The first thing to monitor is the composition of membership-fee growth as the comparison against the September 2024 fee increase evolves. The less growth Costco receives mechanically from pricing, the clearer the underlying contribution from new memberships, renewals and Executive upgrades becomes.
Executive penetration deserves particular attention. Q3’s 9.6% Executive membership growth significantly outpaced total paid-member growth, and management said that strength was coming from both Gold Star upgrades and a higher proportion of new customers selecting Executive memberships.
International expansion provides another avenue. Costco is targeting more than 30 net new warehouse openings annually over the coming years, with management identifying further opportunities across Canada, China, Japan, Korea, Spain and the U.K. New markets can accelerate membership acquisition, although management has also noted that early renewal behavior in new international markets can differ from mature locations.
Digital engagement could increasingly reinforce the same ecosystem. Costco is improving checkout technology, expanding same-day delivery, investing in personalization and adapting product pages for AI-driven shopping discovery. These initiatives matter less as standalone technology projects than as mechanisms for increasing convenience, frequency and member engagement.
Capacity is another structural variable. Costco is relocating selected high-volume warehouses, expanding parking and gas capacity, opening infill locations and using technology to improve throughput. Those investments could allow already productive markets to accommodate additional member spending without compromising the experience that supports renewal.
Over the next 6–12 months, the important question is whether Costco can keep increasing the economic value of each member even if raw membership growth settles into a more normal range.
That is what would separate normalization from genuine maturation. For that reason, the Costco earnings preview is ultimately the beginning of a multi-quarter test rather than a judgment based solely on tonight’s print.
At Costco’s valuation, membership economics matter more than headline sales.
The Earnings Number Beneath The Earnings Number
Costco enters tonight’s report with little mystery surrounding its merchandise sales. Q4 net sales have already demonstrated that consumer demand remains strong, while consensus expectations point toward another quarter of healthy earnings growth.
The more informative debate begins underneath those numbers.
Membership-fee income, Executive-member growth and renewal behavior will indicate whether Costco’s recurring economic engine continues strengthening as the benefit from its 2024 fee increase gradually becomes less important. Merchandise margins will then show how aggressively Costco is using that economic strength to reinforce its value proposition.
Neither outcome should be interpreted from one quarter alone. Costco’s valuation has already compressed from its previous highs, but approximately 45.5x LTM earnings, 28.1x LTM EBITDA and 41.4x NTM normalized earnings still represent demanding multiples for a retailer.
Tonight’s headline will be revenue and EPS; the more consequential question is whether the membership economics underneath them still justify being treated differently from ordinary retail.
The next several quarters will show whether Executive penetration, renewal resilience, organic fee growth and expanding member engagement can keep that distinction intact.
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