Costco Q2 Earnings Beat Estimates on Solid Sales and Membership Growth

Costco Wholesale Corporation COST reported second-quarter fiscal 2026 results, wherein both top and bottom lines surpassed the Zacks Consensus Estimate. The company delivered strong year-over-year growth in revenues and earnings, supported by steady traffic trends, solid membership metrics, robust digitally enabled sales and continued expansion across international markets.Costco’s Quarterly Performance: Key Metrics and InsightsCostco posted quarterly earnings of $4.58 per share, which surpassed the Zacks Consensus Estimate of $4.55. The figure improved 13.9% year over year, up from $4.02 per share in the prior-year period.Total revenues, comprising net sales and membership fees, reached $69,597 million, up 9.2% year over year. The figure also beat the Zacks Consensus Estimate of $69,240 million. Strong sales momentum was driven by steady traffic growth, higher average transaction values and robust digitally enabled demand.Comparable sales rose 7.4% year over year, or 6.7%, excluding the impacts from gasoline price changes and foreign exchange. Global traffic or shopping frequency increased 3.1%, while average ticket grew 4.2%, reflecting both higher unit purchases and product mix improvements. Digitally enabled comparable sales surged 22.6%, highlighting the continued success of Costco’s online initiatives and improved digital engagement. Comparable sales in the United States increased 5.9%, while Canada grew 10.1% and Other International markets rose 13% during the quarter. Across merchandise categories, fresh foods delivered low double-digit comparable sales growth, led by strong performance in meat and bakery products. Nonfoods recorded high single-digit comparable sales gains, supported by strong demand for gold and jewelry, tires, majors, health and beauty and small electrics.Costco’s strategic investments, customer-centric approach and merchandise initiatives, along with an emphasis on membership growth, have helped it capture market share and maintain steady revenue growth. By prioritizing value and quality, the company has built strong customer loyalty, leading to an impressive membership renewal rate of 92.1% in the United States and Canada and 89.7% worldwide in the quarter.Costco Wholesale Corporation Price, Consensus and EPS Surprise Costco Wholesale Corporation price-consensus-eps-surprise-chart | Costco Wholesale Corporation QuoteCostco Achieves Membership Growth and Improved MarginsNet sales climbed 9.1% year over year to $68,242 million, while Membership fees jumped 13.6% to $1,355 million, benefiting from membership growth and upgrades to executive memberships. Excluding foreign exchange impacts, membership income rose 12.2% year over year. Costco ended the quarter with 82.1 million paid household members, up 4.8% from the prior-year period, while total cardholders increased 4.7% to 147.2 million. Executive memberships rose 9.5% to 40.4 million, reflecting strong member engagement and upgrades. Gross margin expanded 17 basis points year over year to 11%, benefiting from stronger ancillary business performance and operational efficiencies. However, the SG&A rate increased 13 basis points to 9.2%, reflecting wage investments and any impact of extended operating hours. Operating income increased 12.5% year over year to $2,606 million.Costco's Store Updates and Expansion PlansCostco currently operates 924 warehouses. These include 634 in the United States and Puerto Rico, 114 in Canada, 42 in Mexico, 37 in Japan, 29 in the United Kingdom, 20 in Korea, 15 in Australia, 14 in Taiwan, seven in China, five in Spain, three in France, two in Sweden and one each in Iceland and New Zealand.During the quarter under discussion, Costco opened four warehouses, including a relocation in the United States, one net new U.S. location, and two Canadian business centers. For fiscal 2026, the company expects to open 28 net new warehouses and is targeting 30-plus warehouse openings annually over the longer term to support continued global expansion.Costco’s Financial Health SnapshotCostco ended the quarter with $17,383 million in cash and cash equivalents. Long-term debt, excluding the current portion, stood at $5,688 million, while shareholders’ equity totaled $32,087 million. Operating cash flow increased meaningfully to $7,684 million for the 24 weeks ended Feb. 15, 2026, up from $6,008 million in the year-ago period. Capital expenditures were $1.29 billion for the quarter, consistent with plans to invest in warehouse openings, logistics, technology enhancements and member-experience improvements. Costco expects fiscal 2026 capital expenditures to be approximately $6.5 billion.Shares of this Zacks Rank #2 (Buy) company have advanced 10.7% over the past three months compared with the industry’s rise of 12.9%.Other Stocks to ConsiderMama's Creations, Inc. MAMA manufactures and markets fresh deli-prepared foods in the United States. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here. The Zacks Consensus Estimate for Mama's Creations’ current financial-year sales and earnings indicates growth of 39.9% and 44.4%, respectively, from the prior-year reported levels. MAMA delivered a trailing four-quarter earnings surprise of 133.3%, on average.Ollie's Bargain Outlet Holdings, Inc. OLLI, a leading off-price retailer of brand-name household products, currently carries a Zacks Rank #2. OLLI has an average trailing four-quarter earnings surprise of 5.2%. The Zacks Consensus Estimate for OLLI’s current financial-year sales and EPS suggests growth of 16.8% and 17.7%, respectively, from the year-ago reported numbers.Boot Barn Holdings, Inc. BOOT, the nation’s leading lifestyle retailer of western and work-related footwear, apparel and accessories, currently carries a Zacks Rank #2. BOOT has an average trailing four-quarter earnings surprise of 4.9%. The Zacks Consensus Estimate for Boot Barn’s current financial-year sales and EPS implies growth of 17.6% and 26%, respectively, from the year-ago reported numbers.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.Free: See Our Top Stock And 4 Runners UpWant 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 Boot Barn Holdings, Inc. (BOOT): Free Stock Analysis Report Ollie's Bargain Outlet Holdings, Inc. (OLLI): Free Stock Analysis Report Mama's Creations, Inc. (MAMA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks