COSTCO WHOLESALE CORP /NEW (COST) — Fundamental Analysis

Costco Wholesale is one of the most consistently profitable large-scale retailers on the planet, and its financials reflect exactly that. Revenue has compounded at roughly 9% annually over the past decade, reaching $275 billion in fiscal year 2025, while profitability margins have quietly but steadily improved across the board. The balance sheet is increasingly fortress-like — debt-to-equity has been cut nearly in half over five years — and the most recent quarter shows the business accelerating, not slowing. For a company of this scale, the combination of durable revenue growth, expanding margins, low leverage, and disciplined capital spending is genuinely rare. Costco is not cheap by conventional valuation metrics, but the underlying business continues to earn that premium.

Snapshot & Big Picture

Costco operates a membership-based warehouse club model that turns razor-thin merchandise margins into an asset rather than a liability. Because members pay upfront annual fees just for the right to shop, Costco can price goods at cost or near-cost, driving enormous volume and fierce customer loyalty. The membership fee stream is essentially pure profit and acts as a recurring annuity layered on top of the retail business. This structure explains why the headline operating and net margins — hovering in the 3–4% range — look modest compared to other consumer businesses, yet the absolute dollar profits on $275 billion in revenue are substantial and growing.

Over the past decade (fiscal years 2015–2025), revenue has grown from $116.2 billion to $275.2 billion. Operating margins have expanded from ~3.1% to ~3.8%, and net margins have moved from ~2.0% to ~2.9%. Meanwhile, debt-to-equity has dropped from 0.58x to 0.20x, signaling steady deleveraging alongside aggressive reinvestment in new warehouse openings and infrastructure.

Latest Quarter Snapshot

The most recent quarterly filing (period ending May 10, 2026, filed June 3, 2026) is the freshest data available and paints an even brighter picture than the full-year figures. Quarterly revenue came in at $70.5 billion, with operating margin reaching 4.0% and net margin at 3.1% — both above the fiscal year 2025 annual averages. Gross margin was reported at 5.3% for the quarter. The current ratio improved to 1.07x and debt-to-equity tightened further to 0.17x, suggesting continued balance sheet strengthening into fiscal 2026.

Profitability

Costco's profitability trend over the past decade is a study in gradual, persistent improvement. Net margin rose from 2.0% in fiscal 2015 to 2.9% in fiscal 2025 — a meaningful expansion for a business operating at this scale. Operating margin followed a similar arc, climbing from 3.1% to 3.8% over the same period, with a brief dip in fiscal 2023 before resuming its upward trajectory. EBITDA has more than doubled, from $4.75 billion in fiscal 2015 to $12.8 billion in fiscal 2025.

The improvement is not dramatic in any single year, but the consistency is the point — Costco has expanded margins even through inflationary pressure and rapid revenue scaling, which speaks to the operating leverage embedded in its model.

Financial Health

Costco's balance sheet has materially strengthened over the past five years. Debt-to-equity stood at 0.43x in fiscal 2021 and has declined to 0.20x by fiscal 2025, with the most recent quarter showing a further reduction to 0.17x. The current ratio has generally stayed just above 1.0x — typical for a warehouse retailer that collects cash from members and customers before paying suppliers — and ticked up to 1.07x in the latest quarter, a healthy level.

Capital Expenditures: Costco is a capital-intensive business, but in a disciplined way. Annual capex has risen steadily in dollar terms — from $2.4 billion in fiscal 2015 to $5.5 billion in fiscal 2025 — reflecting ongoing warehouse openings globally. However, as a percentage of revenue, capex has remained relatively stable, ranging from roughly 1.7% to 2.2% over the decade. The latest quarter's capex-to-revenue ratio of 2.2% is at the higher end of that range, suggesting Costco is in an active expansion phase. This level of reinvestment is consistent with a business growing its physical footprint rather than one facing structural cost inflation, and the company's strong free cash flow generation comfortably absorbs it.

Growth

Costco's revenue growth record across all measured time windows is impressive for a business of its size. The five-year CAGR is particularly notable — exceeding 10% — largely reflecting the post-pandemic surge in volume and new warehouse openings. The three-year rate has moderated as that surge normalizes, but ~6.6% annual growth on a $227 billion base is still exceptional for a mature retailer.

A 9% ten-year revenue CAGR from a company already generating over $100 billion a decade ago is a testament to the durability of Costco's model. The slight deceleration in the three-year window is expected and healthy — it reflects a return to trend after the exceptional 2020–2022 acceleration rather than any sign of structural slowdown. With international expansion ongoing and membership penetration still growing in key markets, the runway for continued mid-to-high single-digit revenue growth appears intact.

Source Filings

• 10-Q filed June 3, 2026 (period ending May 10, 2026) — SEC EDGAR
• 10-Q filed March 11, 2026 (period ending February 15, 2026) — SEC EDGAR