Costco issues a lukewarm quarter, but delivers on the metric that matters most

Costco Wholesale reported a decent quarter Thursday evening, delivering just enough on the membership numbers that we identified as crucial ahead of the print. Total revenue in its fiscal 2026 third quarter increased 11.6% year over year to $70.53 billion, ahead of Wall Street expectations of $69.81 billion, according to estimates compiled by LSEG. Adjusted earnings per share (EPS) in the 12 weeks ended May 10 rose 15.2% to $4.93, in line with expectations, LSEG data showed. Membership fee income in the quarter grew 10.7% to $1.37 billion, slightly exceeding the FactSet estimates of $1.36 billion. The U.S./Canada membership renewal rate ticked higher. COST YTD mountain Costco YTD The stock was not doing much after-hours trading. Weighing the lukewarm print against the benefits to Costco that come with a consumer forced to seek out value, we're maintaining our hold-equivalent 2 rating and $1,100-per-share price target. Bottom line It was not the best quarter, but far from bad. Paid members came up short at 82.9 million but grew 4.1% year over year. However, stability in membership renewal rates should help support the stock, which has dropped some 9% since hitting a 52-week high of just over $1,096 on May 19. Traffic growth decelerated sequentially, but comparable ticket size growth accelerated as consumers continued to seek out the best-in-class value Costco can provide, thanks to its membership, bulk-selling warehouse model, and record demand at the gas pumps. …