Costco Wholesale Corp (COST) — Fundamental Analysis

Snapshot & Big Picture

Costco Wholesale is one of the world's largest retailers, operating a membership-based warehouse club model that generates massive revenue on razor-thin margins. The company earns a significant portion of its real profit from membership fees — a high-margin, recurring revenue stream that underpins its entire financial identity. With over $275 billion in annual revenue for fiscal year 2025 (ended August 31, 2025), Costco sits in rarefied air alongside Walmart as a true retail behemoth. Its model rewards members with low prices and rewards shareholders with steady, compounding growth in earnings and cash flow. The balance sheet has steadily de-leveraged over the past several years, and the current ratio has remained consistently above 1.0, reflecting sound short-term financial management for a business of this scale and complexity.

Latest Quarter Snapshot

The most recent quarterly filing (period ending May 10, 2026, filed June 3, 2026) is more current than the annual figures and provides the freshest read on business momentum. Costco delivered $70.5 billion in quarterly revenue with an EBITDA of $3.41 billion. Notably, gross margin data was available for this quarter at 5.29% — gross margin figures were not reported in the annual 10-K filings in this dataset. Operating margin came in at 3.99% and net margin at 3.11%, both of which are tracking above the most recently completed fiscal year averages, suggesting continued profitability improvement into fiscal 2026. The current ratio of 1.072 is healthy for Costco's model, and debt-to-equity has compressed further to 0.169, the lowest level in the dataset.

Profitability — Multi-Year Trend

Costco operates intentionally on thin margins — that is a feature, not a bug, of its warehouse club model. However, the multi-year trend tells a constructive story: both operating and net margins have been gradually improving. Operating margin has risen from 3.26% in FY2020 to 3.77% in FY2025, while net margin has moved from 2.40% to 2.94% over the same period. EBITDA has grown consistently each year, from $7.08 billion in FY2020 to $12.81 billion in FY2025 — nearly doubling in five years. The most recent quarterly data (3.99% operating margin, 3.11% net margin) suggests FY2026 could post the strongest profitability yet. Gross margin data was not available in the annual 10-K filings within this dataset.

Financial Health

Costco's balance sheet has strengthened meaningfully over the past several years. Debt-to-equity has declined from 0.514 in FY2018 to 0.198 in FY2025, and the trend has continued into the most recent quarter at 0.169. This reflects a company that is paying down leverage while simultaneously growing earnings — a combination that signals durable financial discipline. The current ratio has hovered consistently near or above 1.0, which is considered acceptable for a high-velocity inventory business like a warehouse retailer where payables are managed tightly and inventory turns rapidly. The brief dip below 1.0 in FY2024 (0.966) was modest and has since recovered to 1.034 (FY2025) and 1.072 (latest quarter).

Growth

Costco has compounded revenue impressively across all measured time horizons. The table below summarizes the pre-calculated trailing revenue CAGRs:

A few important notes on interpretation: the 10-year CAGR of 24.91% is exceptionally high in part because the start period (February 12, 2017) appears to represent a partial fiscal quarter in the SEC filing history, with revenue of only $29.8 billion — a quarterly figure rather than a full annual one — which dramatically inflates the calculated long-run CAGR. The 3-year (6.64%) and 5-year (10.54%) CAGRs are more representative of Costco's true organic growth pace, and they reflect a business that has meaningfully accelerated revenue expansion over the pandemic and post-pandemic period, before moderating into a steadier but still solid mid-to-high single-digit annual growth rate at its current enormous scale.

Plain English Summary

Costco is a financial machine built on a deceptively simple idea: charge members a fee, then sell them goods at near-cost prices, making the real money on membership loyalty and high-velocity volume. The numbers bear this out year after year. Revenue has grown from roughly $167 billion in fiscal 2020 to over $275 billion in fiscal 2025, and early fiscal 2026 data suggests that pace continues. Margins are thin by design — around 3-4% operating margin — but they have been quietly improving every year, meaning Costco is becoming slightly more profitable even as it keeps prices low for members. The balance sheet is in excellent shape: debt has been cut nearly in half relative to equity over the past six years, and liquidity is adequate. The latest quarterly data is actually the most encouraging data point in the set — operating and net margins in the May 2026 quarter were the highest seen across the entire dataset. In short, Costco presents the picture of a mature, disciplined, steadily compounding business that continues to grow meaningfully despite already being one of the largest companies on earth by revenue.

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)