Costco Wholesale (NASDAQ: COST) is one of the most successful retail stocks in history. It launched its IPO in 1985 at a split-adjusted $1.67 per share, meaning it has risen 575-fold during its 40-year trading history. Amid its 205% stock price growth over the last five years, it outperformed the S&P 500 during that time, and one might assume it can surpass the index again in the next five.
Nonetheless, its past performance is not a guarantee that the retail stock will repeat or exceed its returns. Thus, investors need to take a closer look at the company and its financials before making such a determination. Let’s do that now.
Image source: Getty Images.
Without a doubt, Costco’s business model helps make it one of the world’s most successful retailers. That fee, which is as low as $65 per year in the U.S., allows customers to purchase desired, high-quality bulk goods at a price that is little more than the cost of goods sold plus overhead.
More importantly, it has developed a business culture that seems to work no matter where Costco tries it. As of its fiscal 2025’s third quarter (ended May 11), 629 of Costco’s 914 stores were in 47 U.S. states. Thus, as the U.S. market becomes more saturated, Costco could potentially drive decades of growth in other countries.
This stands in contrast to retailers like Target and Home Depot, which failed to adapt their business cultures to work outside of their home regions. Since both companies lack obvious avenues for higher growth, Costco seems to have the best growth prospects among the brick-and-mortar retailers with nationwide footprints in the U.S.
Unfortunately for new investors, the investment community already has a wide appreciation of Costco’s success. Its price-to-earnings (P/E) ratio of 54 demonstrates its popularity, which far outpaces its largest competitors’.
COST PE Ratio data by YCharts.
Moreover, in 2025, the earnings multiple briefly exceeded 60, its highest level since the stock market bubble of the late 1990s and early 2000s.
Although Costco is on track…
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