TGT

Costco Wholesale Corporation COST pairs durable membership economics with steady sales growth and expanding digital reach. Fourth-quarter fiscal 2026 revenues reached $95.72 billion, while earnings came in at $6.60 per share, excluding a 15-cent nonrecurring benefit related to tariff refunds. The growth case remains attractive, but the stock already reflects much of that quality. Investors must weigh Costco's operating consistency against a forward earnings multiple that sits well above its industry and the broader market. The Zacks Consensus Estimate calls for fiscal 2027 revenues of $328.53 billion, up 8.4% from fiscal 2026. Earnings are projected to rise 11% to $22.70 per share, extending Costco's multiyear earnings compounding. Fourth-quarter comparable sales increased 9.4%, or 6.7% after excluding gasoline-price and foreign-exchange effects. Shopping frequency rose 3.3%, supporting the view that growth is being driven by continued member engagement rather than price alone. Image Source: Zacks Investment Research Paid memberships increased 3.8% to 84.1 million in fiscal 2026, while Executive memberships climbed 9.4% to 42.3 million. Executive members accounted for 75.2% of worldwide sales, giving Costco a large base of higher-spending customers. Renewal rates reached 92.3% in the United States and Canada and 89.8% worldwide. Membership fee income also grew 7.3% in the fourth quarter, reinforcing the recurring-revenue foundation of the warehouse model. Digitally enabled sales exceeded $33 billion in fiscal 2026 and increased more than 20%. Fourth-quarter digitally enabled comparable sales rose 19.5%, while website and app traffic advanced 30% as Costco expanded delivery partnerships and personalization efforts. The competitive benchmark remains demanding. Walmart Inc. WMT reported 23% global e-commerce growth in its fiscal 2027 second quarter, while Target Corporation TGT posted 8.7% digital comparable-sales growth in second-quarter fiscal 2026. Costco's digital momentum therefore adds another growth channel without replacing its warehouse-led model. COST trades at 42.3X forward 12-month earnings, compared with 28.7X for the Zacks sub-industry and 19.6X for the S&P 500. The stock's five-year median multiple is 42.7X, indicating that investors have long assigned Costco a premium valuation. That premium still reduces the margin for error. Slower earnings growth, softer comparable sales or a reassessment of premium retail valuations could pressure the shares even if the underlying business remains healthy. Image Source: Zacks Investment Research Fourth-quarter gross margin fell 11 basis points to 11.02%. Although gross margin improved 20 basis points excluding gasoline inflation, a $152 million LIFO charge and higher costs in electronics, fuel-related products and other commodities weighed on reported profitability. Selling, general and administrative expenses improved 27 basis points as a percentage of sales, but only two basis points excluding gasoline inflation. Higher labor, health-care and liability costs, merchandise inflation and tariff uncertainty could limit operating leverage if sales growth moderates. Costco's growth profile remains attractive, but its valuation sets a high bar for execution. The current setup supports a measured stance rather than treating operating strength alone as sufficient reason to chase the stock. COST carries a Zacks Rank #3 (Hold). Its Growth Score of A and VGM Score of B support the quality of its growth characteristics, while a Momentum Score of C is neutral and a Value Score of D underscores the valuation concern. For now, the combination points to patience unless earnings growth or valuation becomes more favorable. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Costco Wholesale Corporation (COST) : Free Stock Analysis Report Target Corporation (TGT) : Free Stock Analysis Report Walmart Inc. (WMT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Target Corporation TGT is witnessing strong momentum in its non-merchandise businesses, which are emerging as important contributors to revenue growth and profitability. The company's advertising platform, Roundel, Target+ marketplace and Target Circle 360 membership program are expanding rapidly, creating opportunities to generate higher-margin revenues beyond traditional merchandise sales. The second-quarter fiscal 2026 results highlighted the growing importance of these businesses to Target's financial performance. Non-merchandise sales increased 20.1% year over year during the quarter, significantly outpacing the 5% growth in merchandise sales. Roundel's gross billings advanced nearly 20%, while gross merchandise volume (GMV) on the Target+ marketplace surged more than 40%. Target Circle 360 membership revenues also increased more than 40%, reflecting continued momentum across the company's digital advertising, marketplace and membership offerings. These businesses are contributing to Target's profitability as well. Management highlighted their outsized contribution to top- and bottom-line growth, with higher-margin revenue streams supporting gross margin expansion. Excluding tariff refund benefits, the company's gross margin rate improved approximately 100 basis points year over year, partly reflecting continued growth in advertising and non-merchandise sales. While these businesses represent a smaller portion of Target's overall sales, their faster expansion highlights an evolving revenue mix. The sustained expansion of these businesses suggests that Target is developing additional earnings opportunities beyond product sales. Target, which competes with Dollar General Corporation DG and Costco Wholesale Corporation COST, has seen its shares rally 14% over the past three months compared with the industry's 0.3% rise. Shares of Dollar General and Costco have jumped 3.1% and 2.2%, respectively, in the aforementioned period. Image Source: Zacks Investment Research From a valuation standpoint, Target's forward 12-month price-to-earnings ratio stands at 15.77, lower than the industry's 27.76. However, the stock is trading above its 12-month median level of 14.93. Target is trading at a discount to Costco (forward 12-month P/E of 41.03) but at a premium to Dollar General (15.41). Image Source: Zacks Investment Research The Zacks Consensus Estimate for Target's current fiscal-year sales and earnings per share implies year-over-year growth of 5.1% and 37.8%, respectively. For the next fiscal year, the consensus estimate indicates a 3.1% rise in sales but a decline of 9.5% in earnings per share. Image Source: Zacks Investment Research Target's improving traffic, stronger digital momentum, broad-based category growth and better inventory reliability indicate that its refreshed strategy is gaining traction. Same-day delivery growth, continued price investments and higher-margin revenue streams further strengthen the operating backdrop. Management also raised fiscal 2026 sales and EPS guidance, reflecting greater confidence in underlying momentum. These factors support a constructive investment view on this Zacks Rank #2 (Buy) stock. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Target Corporation (TGT) : Free Stock Analysis Report Dollar General Corporation (DG) : Free Stock Analysis Report Costco Wholesale Corporation (COST) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Costco Wholesale (COST) stock rose 2.9% in the first session after its Q4 FY2026 report. The shares trade at 46.4 times earnings, more than twice the S&P 500's 21.9, so holders are counting on growth that keeps coming. What should a Costco holder take from a quarter that beat estimates and lifted the stock, yet left questions about whether its price cuts are driving more sales? Costco Beat Estimates, And Its Core Sales Held Up Holders should take away that Costco's core sales held up, and the headline figures came in ahead of forecasts. Revenue was $95.72 billion, ahead of the roughly $94.8–95.0 billion consensus. EPS was $6.75, including a $0.15 tariff refund benefit. Excluding it, EPS was $6.60, still above the roughly $6.48–6.55 consensus. The stock outpaced the market, while the S&P 500 gained 0.5% over the same session. Walmart and Target each gained less than 1%. The beat helps explain the rise, and the results also show solid demand once gas prices are set aside. Comparable sales, a like-for-like measure of sales at existing warehouses, rose 9.4% in the quarter. Adjusted for gas prices and currency, they rose 6.7%. Management said higher gas prices added nearly 3% to sales. Traffic, meaning how often members shopped, rose 3.3%. Costco also received money from tariff refunds in the quarter. Where Is Costco's Tariff Refund Money Going? Most of it is going back to members as lower prices. Costco received $184 million in tariff refunds in Q4 FY2026. In the second half of the quarter, it cut prices on items such as produce, meat, beverages, and hardware. Costco has already received a similar amount in Q1 FY2027, management said. Costco intends to reinvest most of that money too. Costco's reported gross margin rate was 11 basis points (hundredths of a percentage point) lower than a year earlier. Excluding gas inflation, it was 20 basis points higher. Excluding the refunds and the price cuts, core margins were 18 basis points higher. Management credited supply chain savings for that gain. On the Q4 FY2026 call, management was asked why monthly sales had not clearly picked up since the price cuts. Management answered that sales outside gas remain very robust. It described the cuts as a way to give the refund money back to members. Management gave no figure for extra spending from the price cuts, though CEO Ron Vachris said unit growth had responded well. Costco's September sales will be the next sign. Costco Reports September Sales On October 7 Costco will report September sales on Wednesday, October 7, after the market closes. The figures cover the five weeks ending October 4. The number that matters is comparable sales adjusted for gas and currency, set against the 6.7% of Q4 FY2026. A pace at or above 6.7% would show Costco holding its growth while it spends refund money on lower prices. Holders paying 46.4 times earnings are counting on that kind of steady growth. A slower pace would leave that growth in question while Costco keeps handing refund money back to members. Beyond COST: A Systematic Way To Grow Your Money Before you decide on COST, consider a better choice. Since its inception, the Trefis High Quality (HQ) Portfolio has returned 105%, beating the benchmark that combines the three major indices - the S&P 500, S&P Mid-cap, and Russell 2000. And it did so without taking the concentrated risk that comes with do-it-yourself stock picking.

Costco Wholesale Corporation COST continues to demonstrate the strength of its membership-driven model as it closes fiscal 2026 with solid operational momentum. The warehouse club operator's latest quarterly performance reflected broad-based resilience, supported by strong member engagement, healthy demand trends and continued expansion across physical and digital channels. Costco's focus on delivering value through curated product offerings, competitive pricing and a differentiated shopping experience has helped it maintain customer loyalty in a dynamic retail environment. However, after the latest earnings beat, investors are now evaluating whether Costco can sustain its growth trajectory amid changing consumer trends and an evolving retail landscape. Examining the company's recent performance, key growth drivers and potential challenges will help determine whether Costco stock is a Buy, Hold or Sell following its quarterly results. Costco shares have risen 3.1% since the company released its fourth-quarter results on Sept. 24. Costco reported adjusted earnings of $6.60 per share, beating the Zacks Consensus Estimate of $6.48 and increasing 12.4% year over year. Reported earnings came in at $6.75 per share, including a 15-cent nonrecurring benefit related to tariff refunds. Total revenues rose 11.1% year over year to $95,723 million, surpassing the consensus estimate of $94,820 million. (Read: COST Q4 Earnings Beat Estimates on Sales and Digital Strength) The quarterly performance reflected healthy demand trends across Costco's business channels. Adjusted comparable sales, excluding gasoline price and foreign exchange impacts, increased 6.7%. Membership remained a key contributor, with membership fee income rising 7.3% to $1,850 million, supported by continued member engagement. Costco benefited from higher shopping frequency and increased spending per visit during the quarter. Worldwide traffic grew 3.3%, while the average transaction value increased 5.9%. The company continued leveraging its value-focused merchandising strategy, with growth across warehouses, ancillary businesses and digital platforms. Over the past seven days, the Zacks Consensus Estimate for the current fiscal year has moved up by 30 cents to $22.80, while the estimate for the next fiscal year has increased 44 cents to $24.90. These estimates indicate expected year-over-year growth rates of 11.5% and 9.2%, respectively. Image Source: Zacks Investment Research Costco's membership ecosystem represents a competitive advantage, supporting recurring revenue growth, customer loyalty and higher spending intensity. Members pay for access to consistent savings and quality merchandise. Membership fee income increased 7.3% year over year to $1,850 million during the final quarter of fiscal 2026. Costco's ability to maintain member trust by offering high-quality products at attractive prices has allowed it to strengthen customer relationships. The worldwide renewal rate improved to 89.8%, while the United States and Canada renewal rate reached 92.3%, reflecting continued member satisfaction and engagement. The company continues to deepen relationships with existing members while attracting younger customers. Rising executive membership penetration, stronger digital engagement and improving retention trends indicate that Costco's customer base is becoming increasingly valuable. Costco ended the quarter with 84.1 million paid members, up 3.8%, and 150.4 million cardholders, up 3.6%. Executive memberships reached 42.3 million, growing 9.4%, with executive members accounting for 75.6% of sales. Executive members typically spend more and show stronger loyalty, supporting higher lifetime customer value over time. Costco's warehouse expansion strategy provides a significant runway for future growth. The company continues to identify opportunities across domestic and international markets, including new markets, mature-market infill locations and expansion opportunities overseas. During fiscal 2026, Costco opened 28 warehouses, including three relocations, resulting in 25 net new buildings and bringing the global warehouse count to 939. Management plans to open another 33 warehouses in fiscal 2027, including five relocations, while targeting a long-term pace of approximately 30 net new warehouse openings annually. Costco's digital transformation is becoming an increasingly important growth contributor. In the quarter, digitally enabled comparable sales increased 19.5%. E-commerce site and app traffic increased 30%, supported by stronger digital capabilities and expanded delivery partnerships. Costco's partnerships with Instacart, DoorDash and Uber Eats provide members with greater convenience. The company is also leveraging artificial intelligence and personalization to improve product discovery and customer engagement. Costco reported triple-digit growth in sales from personalized initiatives during the quarter. Traffic originating from AI search grew in triple digits for the second consecutive quarter. The company's Kirkland Signature private-label brand, ancillary businesses and disciplined merchandising approach provide additional competitive advantages. Kirkland Signature allows Costco to offer differentiated products with strong value, while businesses such as gas, pharmacy and travel increase member engagement and encourage customers to spend more. With a strong balance sheet, including $20,207 million in cash and cash equivalents and $15,825 million in operating cash flow, Costco has substantial financial flexibility to fund warehouse expansion, supply-chain investments and digital initiatives while continuing shareholder returns. Costco's impressive sales figures are part of a larger retail picture where competition is intensifying. Rivals like Dollar General Corporation DG and Target Corporation TGT are investing in expanding their product assortments, enhancing supply-chain efficiency and upgrading in-store and digital experiences to capture greater market share. These retailers are also sharpening their value propositions through competitive pricing, private-label expansion and targeted promotional strategies. Margins remain an area to monitor, as Costco continues to navigate rising costs related to healthcare, general liability, commodities, freight and tariffs. While the company has leveraged productivity initiatives and supply-chain efficiencies to mitigate some pressures, uncertainty around oil prices, tariffs and other input costs could weigh on margin performance. Costco stock has climbed 7.1% year to date compared with the industry's rise of 6.4%. A sneak peek into key retail peers' performance reveals that shares of Dollar General have tumbled 7.6% during the same time frame, while Target has surged 60%. Image Source: Zacks Investment Research Despite Costco's strong fundamentals, its premium valuation remains a key consideration for investors. The stock has historically commanded a premium multiple due to its consistency, brand strength and membership economics. Costco's forward 12-month price-to-earnings ratio stands at 40.65, higher than the industry's ratio of 27.35. However, it is trading below its 12-month median level of 45.10, indicating some moderation in valuation. Costco is trading at a premium to Target (with a forward 12-month P/E ratio of 16.05) and Dollar General (14.92). Image Source: Zacks Investment Research Costco's strong membership ecosystem, consistent execution and expanding digital capabilities continue to support its long-term growth story. However, the stock's premium valuation and potential margin pressures from rising costs warrant a balanced approach. Existing investors may consider holding the stock while monitoring valuation and profitability trends, whereas potential investors may look for more favorable entry opportunities before initiating positions. Costco remains a fundamentally strong company. Costco currently has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Costco Wholesale Corporation (COST) : Free Stock Analysis Report Target Corporation (TGT) : Free Stock Analysis Report Dollar General Corporation (DG) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Dollar General Corporation DG received a meaningful boost from tariff refunds during the second quarter of fiscal 2026, supporting margin expansion and profitability. The company reported that gross profit as a percentage of sales increased 127 basis points year over year to 32.6%. The improvement stemmed from tariff refunds, lower LIFO provisions and reduced distribution costs. Dollar General estimated that tariff refunds, after related reinvestments, contributed approximately 81 basis points to gross margin expansion during the quarter. The benefit from tariff refunds also flowed through to operating profitability. Operating profit increased 29.2% year over year to $769.2 million, while operating margin expanded 126 basis points to 6.8%. The company estimated that tariff refunds, after reinvestments, contributed approximately 66 basis points to operating margin growth. Earnings per share increased 33% to $2.48, including an estimated 25 cents benefit from tariff refunds after related reinvestments. Dollar General directed a substantial portion of the tariff refunds to enhance its customer value proposition. Management noted that the company invested in targeted promotional activities, lower everyday prices and customer-facing initiatives, including increased marketing expenses. The company received the majority of its expected tariff refunds in the second quarter and does not anticipate a material impact from tariff refunds after related reinvestments in the second half of fiscal 2026. While tariff refunds supported margin expansion during the quarter, Dollar General noted that other operational improvements also contributed to profitability, including supply-chain efficiencies, and progress in shrink and damages. Walmart Inc. WMT is also using tariff refunds as a temporary earnings and margin benefit while directing much of the proceeds back into pricing. In the second quarter of fiscal 2027, Walmart said tariff refunds helped lift gross profit and operating income, with operating income receiving an approximately 750-basis-point net benefit after price investments. Walmart expects to continue prioritizing the remaining tariff refunds toward customer experience and price investments in the second half. Target Corporation TGT saw an even more pronounced second-quarter fiscal 2026 earnings benefit from tariff refunds. Target recognized $994 million of pretax tariff refunds, which added $752 million to net earnings and $1.65 to earnings per share. Target said the refunds contributed 3.7 percentage points to both gross margin and operating margin in the quarter. Its full-year guidance includes about 90 basis points of operating-margin benefit from second-quarter refunds while excluding any potential future tariff refunds. Dollar General has seen its shares advance 8% over the past three months against the industry's 1.7% decline. Image Source: Zacks Investment Research From a valuation standpoint, Dollar General's forward 12-month price-to-earnings ratio stands at 15.13, lower than the industry's 27.38. The stock is also trading below its 12-month median level of 16.03. Image Source: Zacks Investment Research The Zacks Consensus Estimate for Dollar General's earnings per share for the current and next fiscal year has increased by 50 cents and 32 cents to $7.89 and $8.39, respectively, over the past 30 days. Image Source: Zacks Investment Research Dollar General currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Dollar General Corporation (DG) : Free Stock Analysis Report Target Corporation (TGT) : Free Stock Analysis Report Walmart Inc. (WMT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Costco Wholesale Corporation's COST fourth-quarter fiscal 2026 results highlighted how the recovery of International Emergency Economic Powers Act ("IEEPA") tariffs could influence its earnings profile in fiscal 2027. In the fourth quarter of fiscal 2026, the company received $184 million related to IEEPA tariffs, comprising $174 million of refunds and $10 million of interest. Management said this represented a little more than one-third of the total refunds expected. Costco had already received a similar amount in the first quarter of fiscal 2027. The earnings impact, however, will depend on how much of these proceeds Costco retains versus reinvests. In the fourth quarter, tariff refunds, net of partial reinvestment in member value, contributed a nonrecurring benefit of 15 cents per share. Excluding this benefit, net income and EPS increased 12.3% and 12.4%, respectively. Management highlighted that tariff refunds and related reinvestment added nine basis points to gross margin. Management intends to reinvest the majority of future refunds in increased member value, primarily through lower prices. During the fourth quarter, such investments included reductions across produce, meat, beverages, home furnishings and hardware. Fiscal 2027 earnings could see periodic benefits from additional refunds, but the net contribution may vary depending on the pace and magnitude of reinvestment. Costco has already indicated that it intends to reinvest the majority of future refunds and separately disclose their net quarterly impact, making the distinction between reported earnings and underlying operating performance particularly important. Walmart Inc. WMT is also using tariff refunds as a temporary earnings and margin benefit while directing much of the proceeds back into pricing. In the second quarter of fiscal 2027, Walmart said tariff refunds helped lift gross profit and operating income, with operating income receiving an approximately 750-basis-point net benefit after price investments. Walmart expects to continue prioritizing the remaining tariff refunds toward customer experience and price investments in the second half. Target Corporation TGT saw an even more pronounced second-quarter fiscal 2026 earnings benefit from tariff refunds. Target recognized $994 million of pretax tariff refunds, which added $752 million to net earnings and $1.65 to earnings per share. Target said the refunds contributed 3.7 percentage points to both gross margin and operating margin in the quarter. Its full-year guidance includes about 90 basis points of operating-margin benefit from second-quarter refunds, while excluding any potential future tariff refunds. Costco has seen its shares tumble 2.5% over the past three months compared with the industry's decline of 2.2%. Image Source: Zacks Investment Research From a valuation standpoint, Costco's forward 12-month price-to-earnings ratio stands at 40.59, higher than the industry's ratio of 27.39. However, it is trading below its 12-month median level of 45.14, indicating some moderation in valuation. Image Source: Zacks Investment Research The Zacks Consensus Estimate for Costco's current fiscal-year sales and earnings per share implies year-over-year growth of 7.9% and 10.4%, respectively. For the next fiscal year, the consensus estimate indicates a 7% rise in sales and 9.5% growth in earnings. The Zacks Consensus Estimate for earnings for the current fiscal year has increased by 7 cents to $22.57 per share, while the estimate for the next fiscal year has risen by 25 cents to $24.71 per share over the past seven days. Image Source: Zacks Investment Research Costco currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Costco Wholesale Corporation (COST) : Free Stock Analysis Report Target Corporation (TGT) : Free Stock Analysis Report Walmart Inc. (WMT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Costco Wholesale Corporation COST reported fourth-quarter fiscal 2026 adjusted earnings of $6.60 per share, which beat the Zacks Consensus Estimate of $6.48 and increased 12.4% year over year. Reported earnings came in at $6.75 per share, including a 15-cent nonrecurring benefit related to tariff refunds. Total revenues rose 11.1% year over year to $95,723 million, surpassing the consensus estimate of $94,820 million. Comparable sales increased 9.4%, while digitally enabled comparable sales advanced 19.5%. Costco Wholesale Corporation price-consensus-eps-surprise-chart | Costco Wholesale Corporation Quote Net sales improved 11.2% year over year to $93,873 million. Comparable sales growth was supported by a 3.3% increase in worldwide traffic and a 5.9% rise in average ticket. Excluding gasoline price and foreign exchange impacts, comparable sales increased 6.7%, with both adjusted ticket and traffic growth of 3.3%. Gas price inflation contributed about three percentage points to reported sales growth, while foreign exchange had a roughly 0.3% negative impact. Comparable sales in the United States increased 10.7%, while Canada and Other International markets registered gains of 5% and 7%, respectively. On an adjusted basis, comparable sales grew 7.2% in the United States, 4.6% in Canada and 6.2% in Other International markets. Nonfoods delivered mid-to-high-single-digit comparable sales growth, led by gold and jewelry, home furnishings, housewares, small electrics, and health and beauty. Fresh foods recorded mid-single-digit comparable sales growth, driven by bakery and meat, while food and sundries posted low-to-mid-single-digit gains. Membership fee income increased 7.3% year over year to $1,849 million and rose 7.7%, excluding foreign exchange effects. Excluding foreign exchange and the September 2024 membership fee increase, membership income advanced 6.8%, driven by higher executive membership penetration and membership growth. Costco ended the quarter with 84.1 million paid members, up 3.8%, and 150.4 million cardholders, up 3.6%. Paid executive memberships increased 9.4% to 42.3 million. U.S. and Canada renewal rates improved 10 basis points sequentially to 92.3%, while the worldwide rate reached 89.8%. Digitally enabled comparable sales increased 19.5%, or 19.8% excluding foreign exchange impacts. Site and app traffic climbed 30%, with pharmacy, home furnishings, small electrics, hardware, housewares, domestics, and health and beauty among the strongest digital categories. Costco expanded third-party same-day delivery through Uber Eats and DoorDash in the United States alongside its Instacart partnership. Management said digitally enabled sales exceeded $33 billion in fiscal 2026 and grew more than 20%. Gross margin contracted 11 basis points year over year to 11%. Excluding gasoline inflation, however, gross margin improved 20 basis points. Core-on-core margins on their own sales increased 18 basis points after excluding tariff refund effects, helped by supply-chain efficiencies and improved fresh-food labor productivity. The SG&A rate improved 27 basis points to 8.9%, though the improvement narrowed to two basis points, excluding gasoline inflation. Operating income increased 13.8% year over year to $3,801 million. Costco ended fiscal 2026 with 939 warehouses after opening 25 net new locations during the year. Management plans 33 openings in fiscal 2027, including five relocations, for a net 28 new warehouses. Cash and cash equivalents stood at $20,207 million at fiscal year-end, up from $14,161 million a year earlier. Fiscal 2026 operating cash flow increased to $15,825 million from $13,335 million, while additions to property and equipment totaled $6,435 million. Costco plans approximately $7.5 billion in capital expenditures for fiscal 2027, primarily supporting warehouse growth and supply-chain investments. Shares of this Zacks Rank #3 (Hold) company have fallen 5.9% over the past three months compared with the industry's decline of 4.8%. Target Corporation TGT, a general merchandise retailer, carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. The Zacks Consensus Estimate for Target's current financial-year sales and earnings indicates growth of 5.1% and 37.8%, respectively, from the prior-year reported levels. TGT delivered a trailing four-quarter earnings surprise of 10.5%, on average. Ross Stores, Inc. ROST is one of the largest off-price apparel and home fashion chains in the United States. ROST carries a Zacks Rank #2. The consensus estimate for Ross Stores' current fiscal-year sales and earnings per share implies growth of 12.4% and 32.7%, respectively, from the year-ago reported figures. ROST delivered a trailing four-quarter earnings surprise of 11.2%, on average. Dollar General Corporation DG, a discount retailer, currently carries a Zacks Rank #2. DG delivered a trailing four-quarter earnings surprise of 19.1%, on average. The Zacks Consensus Estimate for Dollar General's current fiscal-year sales and earnings calls for growth of 4.2% and 15.2%, respectively, from the year-ago reported figures. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Costco Wholesale Corporation (COST) : Free Stock Analysis Report Target Corporation (TGT) : Free Stock Analysis Report Dollar General Corporation (DG) : Free Stock Analysis Report Ross Stores, Inc. (ROST) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

- Interested in Costco Wholesale Corporation? Here are five stocks we like better. - Strong fourth-quarter performance: Costco's net income reached $2.998 billion, or $6.75 per diluted share, while sales rose 11.2% to $93.87 billion. Results included a $0.15-per-share tariff-refund benefit; excluding it, earnings still increased more than 12% year over year. - Growth investments are accelerating: Costco plans to open 33 warehouses in fiscal 2027, targeting 30 net new locations annually, and expects capital expenditures of approximately $7.5 billion. The company also expanded delivery partnerships and reported digitally enabled sales growth of more than 20% for the year. - Membership and pricing momentum remained healthy: Paid executive members grew 9.4% to 42.3 million, total paid members reached 84.1 million, and renewal rates improved. Costco is reinvesting most tariff refunds into lower prices across key categories to reinforce member value. - Holiday Shopping Is Almost Here—And Target May Be Ready to Win Big Costco Wholesale (NASDAQ:COST) reported fourth-quarter fiscal 2026 net income of $2.998 billion, or $6.75 per diluted share, as sales rose 11.2% and the warehouse club continued to invest in pricing, new locations, digital capabilities and membership growth. The results for the 16 weeks ended Aug. 30 included a nonrecurring benefit of $0.15 per diluted share from refunds of tariffs imposed under the International Emergency Economic Powers Act, net of partial reinvestment in lower prices for members. Excluding that benefit, net income increased 12.3% from the prior year and diluted earnings per share rose 12.4%, Chief Financial Officer Gary Millerchip said. → Microsoft's 8% Dividend Hike: Confidence Signal or Distraction From Capex Math? - 2 Stocks Built to Thrive If Inflation Refuses to Fade Fourth-quarter net sales totaled $93.87 billion, compared with $84.43 billion a year earlier. Comparable sales rose 9.4%, or 6.7% after adjusting for gasoline-price inflation and foreign exchange. Digitally enabled comparable sales increased 19.5%, while traffic, or shopping frequency, rose 3.3% worldwide. Costco received $184 million in tariff refunds during the quarter, including $174 million in refunds and $10 million in interest. Millerchip said the amount represented a little more than one-third of the total refunds the company expects to receive. → Paramount Skydance Clears a Major Warner Bros. Discovery Hurdle—Here's What Comes Next - MarketBeat Week in Review – 07/20- 07/24 The company has already received a similar amount in the first quarter of fiscal 2027 and intends to reinvest the majority of future refunds in member value. Chief Executive Officer Ron Vachris said Costco used some fourth-quarter refunds to reduce prices in the latter half of the period on produce, meat, beverages, home furnishings and hardware, among other categories. "Our goal is to be the first to lower prices where we see opportunities to do so," Millerchip said, citing reductions on Kirkland Signature walnuts, Colombian whole bean coffee, dry facial towels and coarse black pepper. → Is the Fed Playing Chess With Rates—Or Just Behind the Curve Again? Responding to an analyst question about the sales impact of those investments, Millerchip said Costco continued to see resilient member spending and comparable sales excluding gas and foreign exchange in the 6% to 7% range. He said the company views the price reductions as returning tariff-related value to members, while adding that non-food sales and travel growth showed members were responding to the company's assortment and value proposition. Costco opened 12 warehouses in the fourth quarter, including 10 new U.S. locations, a relocation in Taiwan and its 43rd warehouse in Mexico. For the full fiscal year, the company opened 28 warehouses, including three relocations, resulting in 25 net new buildings and bringing its global warehouse count to 939. Vachris said Costco plans to open 33 warehouses during fiscal 2027, including five relocations, as it works toward a target of 30 net new openings per year. The planned openings include four in Europe, five in Canada and one in Mexico. The company also cited a pipeline for future expansion in Asia, Australia and other international markets. Capital expenditures totaled $2.21 billion in the fourth quarter and $6.4 billion for the fiscal year. Costco expects approximately $7.5 billion in capital expenditures in fiscal 2027, primarily reflecting warehouse growth and supply-chain investments intended to support future warehouse and e-commerce sales. Management said international markets can produce a higher number of members per warehouse, though those members may shop less frequently than U.S. members. Millerchip said the company evaluates growth not only by membership count, but also by engagement, renewal rates and spending. Membership-fee income rose 7.3% to $1.849 billion. Excluding foreign exchange and the effect of the September 2024 membership-fee increase, membership income grew 6.8%, driven by higher executive membership penetration and growth in the membership base. - Paid executive members reached 42.3 million, up 9.4% from a year earlier. - Total paid members reached 84.1 million, up 3.8%. - Total cardholders reached 150.4 million, up 3.6%. - The U.S. and Canada renewal rate was 92.3%, up 10 basis points sequentially. - The worldwide renewal rate was 89.8%, also up 10 basis points. Vachris said executive membership penetration reached an all-time high during fiscal 2026. He also said members under age 40 have increased by nearly 60% since the COVID period and now account for more than one-quarter of Costco's membership base. While those members initially spend less than the average member, management said spending tends to rise as their households and incomes mature. Digitally enabled sales exceeded $33 billion for the fiscal year, increasing more than 20%. Costco expanded its Uber Eats partnership from 17 states to the entire U.S. and broadened its DoorDash relationship to include the U.S., complementing its existing Instacart partnership in the U.S. and Canada. Vachris said delivery sales are largely incremental to the warehouse grocery business, with average delivery times across the three platforms under an hour. Management also said customers using the newer marketplaces are significantly younger than Costco's overall membership base. Total website and app traffic increased 30% in the quarter. Costco said personalized initiatives generated triple-digit sales growth, and 10% of Costco.com orders now include a personalized item. Traffic from artificial-intelligence search tools also grew at a triple-digit rate for a second consecutive quarter, according to Millerchip, and had the highest conversion rate among sources of site traffic. Costco's reported gross margin rate declined 11 basis points year over year to 11.02%, though it increased 20 basis points when excluding gasoline inflation. The company said reported core-on-core margins were affected by sales-mix changes, as gasoline, e-commerce and pharmacy grew faster than core merchandise. Excluding tariff refunds and the related reinvestment in member value, core-on-core margins on core sales increased 18 basis points. Millerchip said supply-chain efficiencies improved margins across categories, while fresh departments benefited from labor productivity and non-food categories benefited from strong sell-through and favorable sales mix. The company recorded a $152 million LIFO inventory accounting charge in the quarter, compared with $43 million a year earlier. Millerchip attributed the increase primarily to higher memory costs in consumer electronics and inflation in gas, motor oil and resins tied to the ongoing Middle East conflict. He said the full-year LIFO charge was slightly above $200 million, representing roughly 1.5% inflation on U.S. inventory at year-end. Costco's selling, general and administrative expense rate improved 27 basis points to 8.94%. Excluding gas inflation, the SG&A rate improved two basis points. Millerchip said healthcare and general-liability costs have been rising faster than other costs, but the company still achieved modest leverage during the quarter. Looking ahead, Vachris said the company feels positive about its holiday merchandise assortment after tariff-related assortment disruptions were most significant in the first and second fiscal quarters. He said Costco sees continued opportunities to lower prices, add new products and use its Kirkland Signature brand to reinforce value for members. Costco Wholesale Corporation operates membership-based warehouse clubs that offer a broad selection of merchandise at generally competitive prices. Its product range includes groceries, fresh foods, apparel, appliances, electronics, furniture, jewelry, hardware, and seasonal goods, along with private-label products sold under the Kirkland Signature brand. The company also provides a variety of ancillary services, including gasoline stations, pharmacies, optical centers, hearing-aid centers, food courts, tire centers, and travel services. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Costco Wholesale Q4 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for September 2026.

Target (TGT) is back in focus after its Roundel retail media unit reported nearly 20% year over year growth, lifting higher margin advertising income and feeding into improved expectations for earnings and a stronger operating outlook. The recent excitement around Roundel arrives after a sharp run in Target's share price, with a year to date share price return of 55.47% and a 1 year total shareholder return of 84.11%. The 30 day share price return of 8.02% shows some cooling in the near term compared with an 11.96% gain over 90 days that hints at still positive momentum. Scan how Target's Roundel-fueled momentum compares with other retailers by zeroing in on hand picked 30 high quality undervalued stocks that pair resilient cash generation with balance sheets built to handle tougher cycles. After a 1 year total return of 84.11% and a share price near $156, investors are staring at a fresh gap between where Target trades and where valuation models cluster. How wide is that gap in reality, and what does it say about fair value? On the most followed narrative, Target screens as modestly undervalued, with an implied fair value of about $162.76 against a last close of $156.26. This puts the recent Roundel excitement into a broader multi year earnings and valuation story. The growing and profitable first-party digital business, along with double-digit growth in Target's Roundel (retail media) and Target Plus (marketplace) segments, suggest successful omnichannel integration and new high-margin revenue streams, countering concerns about declining in-store traffic and supporting earnings growth. See why 150 investors see Target as 4% undervalued. According to the most widely followed narrative, analysts are using a 7.38% discount rate to bring Target's projected earnings back to today's dollars. This results in that fair value cluster around $162.76. Those same projections assume revenue growth of roughly 3.4% a year, profit margins near 3.8%, and a future P/E of about 20x that sits above the current Consumer Retailing average of 17.9x. The slight undervaluation signal therefore rests on the idea that the market may not be fully pricing in that earnings profile yet. Result: Fair Value of $162.76 (UNDERVALUED) Still, the Target narrative can break if discretionary categories stay sluggish and if e-commerce rivals keep pressuring margins faster than recent efficiency gains can offset. Find out about the key risks to this Target narrative. Whether you are undecided on Target after all this, or already leaning one way, use the full picture of 4 key rewards and 2 important warning signs to pressure test your own view. Round out your view on Target by lining it up against other potential opportunities, so you keep options open instead of backing into just one story. - Spot potential bargains early by scanning a curated set of resilient businesses through the 30 high quality undervalued stocks. - Prioritise strength and staying power by filtering companies using the list of solid balance sheet and fundamentals (23 results). - Hunt for future leaders hiding in plain sight with the 16 high quality undiscovered gems. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include TGT. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

As Costco Wholesale Corporation COST prepares to unveil its fourth-quarter fiscal 2026 earnings results on Sept. 24, after the market closes, investors face an important decision: Should they buy, hold or sell the stock? With expectations and market conditions in focus, it is crucial to evaluate the key factors influencing Costco’s performance and whether the stock offers an attractive entry point.Costco's strategic investments, customer-centric approach, merchandise initiatives and focus on membership growth have supported steady sales and earnings growth, positioning COST as a consumer defensive stock.The Zacks Consensus Estimate for fourth-quarter revenues stands at $94.82 billion, calling for a 10.1% increase from the prior-year reported figure. On the earnings front, the consensus estimate has fallen by 3 cents to $6.48 per share over the past 30 days but still implies a 10.4% year-over-year jump.Costco has a trailing four-quarter earnings surprise of 1%, on average. In the last reported quarter, this Issaquah, WA-based company beat the Zacks Consensus Estimate by a margin of 0.4%. Image Source: Zacks Investment Research As investors prepare for Costco's fourth-quarter announcement, the question looms regarding an earnings beat or miss. Our proven model does not conclusively predict an earnings beat for Costco this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that’s not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.Costco has a Zacks Rank #3 but an Earnings ESP of -0.19%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. Costco Wholesale Corporation price-consensus-eps-surprise-chart | Costco Wholesale Corporation Quote Costco’s fourth-quarter performance is likely to have benefited from the continued strength of its value-focused merchandising model, which supports shopping frequency and basket expansion even in a cautious consumer environment. Members continued to respond well to the combination of quality, value and newness, with healthy demand likely across fresh foods, nonfoods and everyday essentials. Kirkland Signature also remained an important engagement driver through new product launches and attractive pricing, reinforcing traffic and member loyalty.In its August sales report, Costco highlighted that net sales rose 11.3% year over year to $93.9 billion for the 16-week fourth quarter. Comparable sales increased 9.4% companywide. The United States posted a 10.7% comparable-sales gain, while Canada and Other International rose 5% and 7%, respectively.The company’s expanding paid membership base and healthy growth in Executive memberships are also likely to have contributed to fourth-quarter performance. Executive members generally shop more frequently and spend more with Costco, supporting sales. Meanwhile, targeted digital communications and retention efforts are helping stabilize renewal trends, while management remained encouraged by new-member sign-ups. The continued shift toward Executive memberships, along with the benefit from the earlier fee increase, is likely to have supported membership-fee income.Costco’s expanding digital capabilities and warehouse network may have provided further support to the top line. The company has been improving checkout speed, mobile-wallet functionality and digital membership access while expanding same-day delivery and personalized online recommendations. We note that digitally enabled comparable sales climbed 19.5% during the final quarter. At the same time, Costco remained focused on opening and relocating warehouses, remodeling high-volume locations and improving parking and gas-station capacity to enhance convenience and support higher volumes.However, Costco may have faced pressure from an uncertain cost environment. Inflationary pressures stemming from higher input and component costs, along with tariff-related uncertainty, remained concerns. Combined with the company’s continued focus on maintaining attractive prices for members, these factors are likely to have weighed on margins in the fourth quarter. Costco, which competes with Dollar General Corporation DG and Target Corporation TGT, has seen its shares jump 4.3% in the year-to-date period compared with the industry’s rise of 4.4%. While shares of Target have surged 62.6%, those of Dollar General have fallen 7.7% in the aforementioned period. Image Source: Zacks Investment Research From a valuation standpoint, Costco currently trades at a premium relative to its industry peers. The company’s forward 12-month price-to-earnings (P/E) ratio is 39.75, higher than the industry average of 27.04 and the S&P 500’s 20.06. However, the stock is trading below its median P/E level of 45.28, observed over the past year. Costco is trading at a premium to Target (with a forward 12-month P/E ratio of 16.30) and Dollar General (15.16). Image Source: Zacks Investment Research Costco’s resilient sales trends, strong membership base, digital momentum and value proposition support the long-term story, but margin pressures, a premium valuation and the lack of a clear earnings-beat signal warrant some caution ahead of the release. Existing investors may consider holding their positions, while prospective investors may be better served waiting for greater clarity from the fourth-quarter results before initiating a position. Overall, the risk-reward setup suggests a measured approach rather than aggressive buying ahead of earnings. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Costco Wholesale Corporation (COST) : Free Stock Analysis Report Target Corporation (TGT) : Free Stock Analysis Report Dollar General Corporation (DG) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research