The Zacks Analyst Blog Highlights Costco Wholesale, Dollar General, Ross Stores and Target
Chicago, IL – July 18, 2025 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Costco Wholesale Corp.'s COST, Dollar General Corp. DG, Ross Stores, Inc. ROST and Target Corp. TGT.
Here are highlights from Thursday's Analyst Blog:
Should Investors Buy, Hold or Sell Costco After June Sales?
Costco Wholesale Corp. 's June sales results provide fresh insights into the retail giant's performance. Known for its steady growth and leadership in the warehouse club space, Costco continues to attract long-term investors. However, the latest figures could influence the stock's near-term trajectory. Here's a closer look at the results to assess whether Costco stock is a buy, hold or sell after the June sales update.
Decoding Costco's June Sales Report
Costco's membership-driven model remains a core strength, with high renewal rates ensuring a dependable revenue stream. Its efficient supply chain and bulk purchasing power enable competitive pricing, reinforcing its strong market position. This combination of customer loyalty and operational efficiency continues to give Costco an advantage in a competitive retail landscape.
For the five weeks ended July 6, 2025, Costco reported a 5.8% year-over-year increase in total company comparable sales. Regionally, comparable sales rose 4.7% in the United States, 6.7% in Canada and 10.9% in Other International markets. E-commerce also remained a bright spot, with comparable sales surging 11.5%. (Read: Costco's June Sales Climb on Robust 11.5% E-Commerce Growth)
As a result, Costco's net sales for June increased 8% to $26.44 billion, up from $24.48 billion in the same period last year. This follows a sales improvement of 6.8% and 7% reported in May and April, respectively, reflecting a strong and consistent sales performance over the past few months.
Membership Model Fuels Consistent Revenue Growth
Costco continues to deliver strong revenue growth, showing its ability to adapt steadily to changing economic conditions. The increase in membership fee income, driven by a high renewal rate of 92.7% in key markets like the United States and Canada, emphasizes the company's effective customer retention strategies and high member engagement.
With a large base of paid household members and an increasing share of executive memberships, Costco maintains stable membership fee income. As of the third quarter of fiscal 2025, the retailer reported 79.6 million paid household members, a 6.8% increase year over year. Executive memberships — Costco's more profitable tier — grew 9% to 37.6 million, now accounting for 47.3% of total paid members and making up 73.1% of global sales.
By steadily enhancing its e-commerce capabilities and investing in fulfillment infrastructure, Costco is creating a more integrated omnichannel shopping experience. Its e-commerce comparable sales rose 14.8% in the third quarter. Notably, Costco Logistics deliveries surged 31%, driven by increasing volumes of large and bulky items. The launch of a Buy Now Pay Later program, in partnership with Affirm, has offered members greater purchasing flexibility, especially for higher-priced items.
The company takes a measured approach to expanding its global warehouse footprint. During the third quarter, Costco opened nine warehouses — including seven in the United States, one in Japan, and a relocation in Australia — and plans to open 10 more in the final quarter, including its second warehouse in Sweden and 20th in Korea. For fiscal 2025, the company expects 27 total openings (24 net new), bringing its global warehouse count to 914.
Meanwhile, Costco's disciplined focus on cost control, product mix optimization and growing penetration of its private-label brand, Kirkland Signature, continues to support margin expansion. Kirkland Signature sales outpaced overall company growth in the third quarter, with penetration rising 50 basis points year over year. The company continues to shift more Kirkland Signature sourcing to the regions where items are sold, helping reduce costs and mitigate tariff impacts.
How Consensus Estimates Stack Up for Costco
Over the past 30 days, analysts have lowered their estimates for the current fiscal year by 9 cents to $17.97. For the next fiscal year, the Zacks Consensus Estimate has increased 3 cents to $19.93. These estimates suggest year-over-year growth rates of 11.6% and 10.9%, respectively.
Does Costco's Valuation Reflect Strength or Stretch?
Costco stock has been a standout performer, with shares rallying 13.4% over the past year, outpacing the industry 's growth of 6.1%. This impressive growth underscores investor confidence in Costco's business model.
Costco has even outperformed its peers, such as Dollar General Corp., Ross Stores, Inc. and Target Corp.. Shares of Dollar General, Ross Stores and Target have declined 7.4%, 10.7%, and 33.4%, respectively, over the past year.
However, Costco is trading at a significant premium to its industry peers. The company's forward 12-month price-to-earnings ratio stands at 48.33, higher than the industry's ratio of 31.85 and the S&P 500's ratio of 22.55. However, the stock is trading below its median P/E level of 50.76, observed over the past year.
Costco is trading at a premium to Dollar General (with a forward 12-month P/E ratio of 18.63), Ross Stores (19.89) and Target (12.95).
Now, the question arises whether Costco's current price is warranted or overvalued in today's market.
The company's high valuation shows that investors have strong faith in the company's steady growth, loyal customer base, and solid business model. This premium may be deserved, given Costco's consistent performance, but it also means the stock has less room for error. At this level, some of the future growth may already be priced in, making it harder to justify further upside.
Should You Invest in Costco Now or Wait for a Pullback?
Costco's June sales results reaffirm its position as a dependable stock in the retail sector, backed by strong membership growth, consistent comparable sales improvement and solid financial fundamentals. While the stock trades at a premium valuation, this appears justified given its operational resilience, expanding global footprint and loyal customer base.
For long-term investors willing to pay up for quality and stability, Costco remains a compelling choice. However, for value-conscious buyers, the elevated valuation may warrant patience for a more attractive entry point. Costco currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Research Chief Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners Up
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the favorite stock to gain +100% or more in the months ahead. They include
Stock #1: A Disruptive Force with Notable Growth and Resilience
Stock #2: Bullish Signs Signaling to Buy the Dip
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Stock #4: Leader In a Red-Hot Industry Poised for Growth
Stock #5: Modern Omni-Channel Platform Coiled to Spring
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor. While not all picks can be winners, previous recommendations have soared +171%, +209% and +232%.
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Target Corporation (TGT): Free Stock Analysis Report
Dollar General Corporation (DG): Free Stock Analysis Report
Ross Stores, Inc. (ROST): Free Stock Analysis Report
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