Costco: Is the Opportunity Over?

By Reuben Gregg Brewer – Apr 4, 2026 at 11:15AM ESTKey PointsShares of Costco fell nearly 20% at one point over the last year.The stock has recovered most of the ground it lost.Costco (COST +1.82%) is a club store, meaning its customers pay membership fees to shop at its stores. This changes the retailer's profit equation in a very important way. That's both a positive and a negative when you consider Costco as an investment. Costco's drawdown is over Costco's stock fell just shy of 20% in the back half of 2025, hitting a bottom just before the end of the year. That's a big drawdown, but one that is fairly normal for this retailer. Over the past decade, the stock has fallen by 15% or more on multiple occasions. Given that Costco's share price is just 7% below its all-time high, each one of the drawdowns over the past decade was a buying opportunity. Image source: Getty Images. One of the biggest reasons to like Costco is its business model. The membership fees it collects create an annuity-like income stream and allow the company to compete aggressively on price. It's a virtuous cycle that keeps members coming back for more and the company's revenues rising.

But Wall Street is well aware of the positives, pushing the shares higher to the point where Costco is now one of the world's largest consumer staples stocks. And that changes the equation in a big way. Costco's valuation isn't what it was Given the rebound in Costco's stock price, the current buying opportunity presented by the recent drawdown does indeed look over. However, investors need to take a broader view when deciding whether to buy this giant retailer. Notably, Costco's price-to-sales, price-to-earnings, and price-to-book ratios are all above their five-year averages right now. Using traditional valuation tools, the stock looks expensive. ExpandNASDAQ: COSTCostco WholesaleToday's Change(1.82%) $18.16Current Price$1014.73Key Data PointsMarket Cap$450BDay's Range$999.91 - $1015.7052wk Range$844.06 - $1067.08Volume89KAvg Vol2.2MGross Margin12.93%Dividend Yield0.51% That said, even during the worst of the recent drawdown, the stock was still expensive. For example, at the nadir near the end of 2025, the P/E ratio dropped to around 45X. That is well below the stock's recent peak P/E of over 60x, but still at the high end of the stock's historical P/E range. For comparison, the S&P 500 index (^GSPC +0.11%) has an average P/E of nearly 28x, and it is still near its all-time highs. So even during the last drawdown, most value investors would have still found Costco's stock far too expensive to buy. Is Costco worth buying? Essentially, Costco, even during a drawdown, is likely to be attractive only to more aggressive growth investors. If that's what you are, keep it on your wish list for the next big drawdown. But before you buy it, make sure you understand just how expensive the stock is, both on an absolute basis and relative to its history and the broader market.Read NextApr 3, 2026 •By Frank BassBest Dollar Store Stocks for 2026 and How to InvestApr 2, 2026 •By Will Healy3 Retail Stocks Built to Survive Tariffs, Inflation, and the Next 30 YearsApr 1, 2026 •By Adria CiminoBetter Stock to Buy Right Now: Costco vs. AmazonApr 1, 2026 •By John BallardHow Much Would $1,000 Invested in Costco 10 Years Ago Be Worth Today?Mar 31, 2026 •By Bram BerkowitzCostco Will Soon Open Its First Stand-Alone Gas Station to Members. Here's What Investors Need to Know.Mar 30, 2026 •By Neil PatelCould Buying Costco Stock Today Set You Up for Life?About the AuthorReuben Gregg Brewer is a contributing Motley Fool stock market analyst covering energy, utilities, REITs, and consumer staples. He is the former director of research at Value Line Publishing, where he rose from mutual fund analyst to equity analyst before leading all research operations. Reuben holds a bachelor’s degree in psychology from SUNY Purchase, a master’s in social work from Columbia University, and an MBA from Regis University. He has been featured as a financial expert on CNBC and in the Financial Times, Barron’s, and InvestmentNews.TMFReubenGBrewerStocks MentionedCostco WholesaleNASDAQ: COST$1,014.96(+1.85%)+$18.40S&P 500 IndexSNPINDEX: ^GSPC$6,582.69(+0.11%)+$7.37*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.