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Costco Wholesale Corporation (NASDAQ: COST) has been a strong performer over the years, known for its steady growth, loyal membership base, and ability to weather economic downturns. However, with recent earnings missing expectations and external factors like tariffs and international expansion in play, many investors are wondering: Is Costco stock a buy now, or is it better to wait? Let’s break it down.
Recent Performance and Stock Movement
Costco recently reported its Q2 2025 earnings, with net sales increasing 9.1% year-over-year to $62.53 billion. However, its earnings per share (EPS) came in at $4.02, missing analyst estimates of $4.09. This led to a slight dip in Costco’s stock price, which is currently trading around $934.41, down 3% from recent highs.
Despite the earnings miss, analysts remain bullish. The consensus among 29 analysts is a "Moderate Buy", with a 12-month price target of $1,030.43, representing about 10% potential upside.
How Tariffs Are Impacting Costco
Costco has been proactive in dealing with tariff uncertainties by buying extra inventory to avoid potential supply chain disruptions. While this has helped keep prices stable for members, it has also increased costs, slightly squeezing profits. CEO Ron Vachris reassured investors that Costco’s strong relationships with suppliers help them navigate these challenges, but inflation remains a concern.
How Is Costco Performing Overseas?
Costco’s international business is growing and now contributes 27.1% of total revenue, with key markets including Canada, China, and Spain. The company continues to expand internationally, and analysts believe the growth potential outside the U.S. is strong, possibly outpacing domestic expansion in the long run.
Is Costco Stock Overvalued? Should You Buy Now or Later?
While Costco has strong growth prospects, some valuation metrics suggest it may be overpriced at current levels. Zacks gives it a "D" for value, meaning it might not be ideal for value investors right now. That said, Costco's revenue and earnings are expected to grow at 7% and 10% annually over the next few years, making it a solid long-term investment.
Final Thoughts: Buy Now or Wait?
- Bullish case: Costco continues to expand, has strong membership retention, and is well-positioned for long-term growth. Analysts expect 10%+ upside in the next year.
- Bearish case: The stock missed earnings expectations, faces tariff-related cost pressures, and may be overvalued based on current metrics.
If you are a long-term investor, Costco remains a solid stock, especially if you believe in its international expansion and ability to manage economic headwinds. However, if you are waiting for a better entry point, you may want to watch for a pullback before buying.