Costco (COST) reported its operating results for the 16-week fourth quarter and 52-week fiscal year ended August 30, 2026. Its results were solid, but they did not exceed expectations.
Net sales increased 11.2% to $93.9 billion in Q4 FY2026. For the full fiscal year 2026, net sales reached $297.2 billion, up 10.1% year over year.
Costco’s performance in the U.S. was particularly strong. U.S. comparable sales increased 10.7% in the quarter, or 7.2% excluding the impact of changes in gasoline prices and foreign exchange rates. For the full fiscal year 2026, U.S. comparable sales grew 8.2%, or 6.6% on an adjusted basis.
Costco reported net income of $2.998 billion for the quarter, up 14.9% year over year. For the full fiscal year 2026, net income totaled $9.226 billion, an increase of 13.9%.
Is Costco’s Market Capitalization Reasonable?
Costco’s current market capitalization is $409 billion. Is the stock undervalued?
Costco generated $9.39 billion in free cash flow in fiscal 2026. After deducting $924 million in stock-based compensation (SBC), adjusted free cash flow was $8.466 billion.
Applying a valuation multiple of 25 times adjusted free cash flow gives Costco a fair value of $211.65 billion.
My view remains unchanged: Costco is still significantly overvalued.
Valuation Tool：
