Costco Stock Is Soaring, but Is It Getting Ahead of Itself?

By John Ballard – Feb 22, 2026 at 5:15PM ESTKey PointsCostco stock is up 15% year to date after a strong January sales report.The stock is trading at a high price-to-earnings multiple of 53, raising concerns about its valuation.Despite strong digital sales, total sales and earnings growth have been modest.We’re bullish on these 10 stocks ›NASDAQ: COSTCostco WholesaleMarket Cap$437BToday's Changeangle-down(-0.30%) $2.99Current Price$984.83Price as of February 20, 2026 at 3:58 PM ETIs the company delivering enough growth to support its high valuation?Costco Wholesale (COST 0.30%) delivered a stellar January sales report, with digital sales rising notably. The company has been building out a robust e-commerce platform for years, and it is starting to show. Costco said digitally enabled sales grew 34% year over year in January -- a notable improvement from previous weeks. After a recent pullback, the stock is now up about 15% year to date. The recent sales report builds on the strength seen in the last quarter, with consumers beginning to pick up spending on big-ticket items such as jewelry and appliances. Investors like to see this because these pricier items generally generate higher margins than food and sundries. Image source: Getty Images. However, the stock's run raises concerns around its valuation. The shares are now trading at a price-to-earnings (P/E) multiple of 53. Even using forward earnings estimates, the stock trades at an expensive P/E of 49. Usually, investors need to see much higher growth to justify this valuation level. Despite Costco's strong digital sales performance, total net sales are still growing in the single-digit range -- 9% year over year for January, and 8% in the fiscal first quarter ending Nov. 23. Earnings per share have grown at an annualized rate of 11% over the past three years, and analysts are modeling long-term earnings growth of about 9%. That is very light growth for a stock priced around 50 times earnings.

Several Magnificent Seven companies, in addition to consumer staples like Coca-Cola and Procter & Gamble, are trading at lower P/Es relative to earnings growth, offering investors better value for their money. The stock is priced for flawless execution, which Costco excels at, but also for robust earnings growth, which isn't happening. Investors should be cautious about buying shares at these levels, as stocks can't outpace the business's long-term growth. It might be wise to keep Costco on a watch list and consider buying it at a lower valuation.Read NextFeb 22, 2026 •By Will Healy1 Reason I Haven't Bought Costco Stock -- and Probably Never WillFeb 20, 2026 •By Micah Zimmerman3 Monster Stocks to Hold for the Next 20 YearsFeb 19, 2026 •By Daniel SparksBack Near $1,000, Is Costco Stock a Buy Now?Feb 19, 2026 •By Neil PatelWhere Will Costco Be in 5 Years?Feb 19, 2026 •By Leo SunIs Costco (COST) Stock Going to $1,200?Feb 17, 2026 •By Neil PatelBest Consumer Stock to Buy Right Now: Costco or Home Depot?About the AuthorJohn Ballard has been a contributing writer at The Motley Fool since 2016, covering consumer goods and technology stocks. He holds a bachelor’s degree in business administration with a focus in real estate finance from the University of Arkansas at Little Rock.TMFRazorbackStocks MentionedCostco WholesaleNASDAQ: COST$984.83 (0.30%) $2.99*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.