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Today’s Featured News

The Best Holiday Present You Can Give Yourself? Costco Stock

Author: Thomas Hughes. Publication Date: 12/12/2025. 

Summary

• Costco had a solid quarter and showed momentum in its Q1 FY2026 results, providing investors with reasons to be optimistic.
• Cash flow is positive, the cash pile is building, and a special dividend payment is on the horizon.
• Analysts lifted price targets and pointed to a solid double-digit upside and new all-time highs.

Costco (NASDAQ: COST) remains a compelling buy-and-hold for 2026, delivering industry-leading growth and solid margins despite macroeconomic headwinds and shifting consumer habits. It also makes a strong late addition to 2026 portfolios: trading near a major support level in mid-December limits downside while several catalysts are in place.

Those catalysts include a strong Q1 for fiscal 2026 (FY2026) and a healthy long-term growth outlook driven by international expansion and a growing cash position.

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Costco’s cash balance at the end of Q1 stood at just over $16.2 billion, up nearly 15% year-over-year. That level supports financial flexibility, keeps cash flow positive and makes additional capital returns likely. Costco does not buy back shares aggressively nor does it pay a large regular dividend, but its tendency to accumulate cash has historically resulted in attractive special dividends paid every few years.

The most recent special dividend, paid in December 2023, was $15 per share—roughly 1.65% of mid-December pricing—paid in a single lump sum. With the cash balance remaining elevated, another special dividend remains a reasonable possibility.

Costco Had a Strong Quarter and Trimmed Its New-Store Outlook

Costco reported a strong Q1: revenue rose 8.2% to $67.31 billion, beating MarketBeat’s reported consensus by about 280 basis points. The beat was driven by new stores and healthy comparable sales. Network-wide comparable sales increased 6.4%, supported by a 3.2% rise in average ticket and a 3.1% increase in traffic.

By segment, U.S. comps rose 5.9%, Other International increased 6.8% and Canada gained 9%. Digital sales, a key growth channel, grew 20.5%, and fees—a forward-looking indicator—were up 14%.

Margin trends were positive: gross margin widened and selling, general and administrative expenses improved slightly, supporting faster earnings growth. Operating income increased about 12.2%, while net income and GAAP earnings rose 11.3%.

Costco does not provide formal guidance, but the combination of additional stores, comparable-store momentum and rising membership points to continued strength in the near term.

Operationally, strong cash flow boosted cash on the balance sheet and increased inventory to support new locations. Total assets rose along with some liability growth, and shareholders’ equity improved roughly 3.8%, in addition to ongoing share repurchases and the regular dividend.

Share repurchases and the dividend remain modest but consistent, helping concentrate ownership and support the stock. The current annualized dividend yield of roughly 0.6% is modest, and buybacks trimmed the share count slightly in FQ1.

Analysts See Upside for Costco Shares

Analysts’ reactions were broadly constructive: only one firm lowered its price target, consistent with the consensus, while most revisions were bullish. Consensus targets imply roughly 15% upside for COST, with many analysts clustering in the $1,100 to $1,200 range and some bulls projecting as high as $1,400 over the longer term.

A move to new all-time highs would mark a clear breakout for a stock that has traded in a range for more than a year and could open the door to more aggressive upside targets.

Technically, a base-case scenario envisions an incremental move of about $100, which places the stock near approximately $1,185 relative to key resistance. The bull case envisions a sustained uptrend that could multiply that base-case gain over time.

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