Key Points
Costco (NASDAQ: COST) delivered another stellar earnings report for the second quarter of fiscal 2026 (ended Feb. 15). The company continues to deliver steady growth amid an uncertain economy, and that has reassured investors to the point that its stock is close to the $1,000 per share level.
The question now is where the stock goes from here. Can it reach $1,500 per share anytime soon, or is its growth going to plateau?
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The state of Costco stock
Investors should keep in mind how its track record of consistent growth has boosted the stock over time. Over the last five years, the stock is up by more than 210%, far surpassing the S&P 500‘s performance.
Investors can probably credit the company’s financial performance for those returns. In fiscal Q2, its nearly $70 billion in revenue surged higher by 9.2% from year-ago levels. This is in line with the 8.8% increase for the first half of fiscal 2026 and the 8.1% rise in fiscal 2025.
To that end, it earned just over $2.0 billion in fiscal Q2, rising 14% as revenue growth outpaced the increase in costs and expenses.
Moreover, investors have little reason to believe the pace of growth will change, as analysts forecast 8.4% revenue growth for the current fiscal year.
However, the path to $1,500 may be more difficult due to the aforementioned success. Costco’s consistency is well understood by investors in retail stocks, and that knowledge has led to so much stock price growth that Costco now trades at about a 54 P/E ratio. That makes it a more expensive stock than its largest rival in the U.S., Sam’s Club parent Walmart, as well as BJ’s Wholesale and Amazon.
COST PE Ratio data by YCharts
Considering that profit growth is barely in the double digits, investors may struggle to justify such an earnings multiple.
Nonetheless, Costco faces no obvious threats to its growth. The company has sidestepped the international challenges that slowed the growth of retailers like Walmart in previous decades. Since 634 of its 924 warehouses are in the U.S., it could possibly maintain its growth rate for decades abroad.
Additionally, investors should not write off its remaining potential at home. Many midsize metros in the U.S. do not yet have a Costco. Also, many large metros lack a Costco Business Center, which specifically serves restaurants, offices, and small businesses. Such opportunities should help take the stock significantly higher over time.
Is Costco going to $1,500?
Costco is a long-term buy and should eventually reach $1,500 per share, but that journey will likely take years.
Ultimately, the company’s consistent growth and potential for expansion should take the stock much higher over time.
However, overvaluation could slow that rise. Although Costco continues to deliver consistent growth, it is likely not fast enough to justify its 54 P/E ratio. This makes the stock’s near-term direction uncertain and may lead investors to retail stocks with lower valuations.
Still, if one holds Costco stock for long enough, $1,500 per share is probably well within reach.
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Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Costco Wholesale, and Walmart. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
