Costco(COST.US) receives praise from major banks after earnings! Structural advantages are hard to shake, with potential to continue capturing market share.

The Lian Suo Membership Warehouse Supermarket Costco (COST.US) announced its second fiscal quarter results that exceeded market expectations. The company reported no difficulty in increasing and retaining members and expects to benefit from tax refunds and potential tariff reimbursements this year. After releasing this latest performance, several major bank analysts issued positive ratings for the stock.

The financial report shows that for the second quarter of fiscal year 2026 ending February 15, Costco’s revenue increased by 9.2% year-over-year to $69.6 billion, beating market expectations by $280 million; membership fee income reached $1.36 billion, surpassing market forecasts. Overall same-store sales grew by 7.4%—with a 4.2% increase in average transaction size and a 3.1% increase in customer traffic—above the market expectation of 6.7%; U.S. same-store sales increased by 5.9%, higher than the expected 5.7%. In terms of profit, operating income was $2.61 billion, up 12.5% year-over-year; adjusted earnings per share were $4.58, three cents above the average forecast.

Costco stated that with large package sizes and unique product selections, the retailer attracts cost-conscious consumers—especially those with higher disposable income—thus gaining market share. The retailer has also expanded e-commerce and delivery services and added exclusive shopping hours for premium members.

Bank of America reaffirmed its “Buy” rating for Costco. Analyst Christopher Nardone said that the company’s ongoing strategy of reinvesting profits into pricing has strengthened confidence in its continued market share expansion across various product categories. The analyst also pointed out that the growth in Executive Memberships and stable renewal rates are positive factors. Additionally, Nardone noted that Costco can somewhat resist the impact of rising fuel prices. He stated, “While soaring gasoline prices may temporarily compress fuel business profits, sustained high oil prices could drive more customers to stores because Costco offers price advantages—especially since about half of members visit both gas stations and warehouses.”

Jefferies also maintained a “Buy” rating for Costco. Analyst Corette Tarlowe emphasized, “Despite sales and management expense pressures from product mix and claims reserves, core profit margins have improved. Looking ahead, store expansion, capital expenditure investments, and disciplined pricing will be the foundation for continued market share growth.”

Morgan Stanley also maintained an “Overweight” rating for Costco with a target price of $1,130. Analyst Simeon Gutman pointed out that the company has strong execution in member growth, membership fee income, and core profitability, and comparable sales are expected to accelerate again after entering spring. He said, “These results highlight the company’s structural advantages, including supply chain efficiency, value pricing, and scale benefits. We believe these advantages will continue to support its market share expansion and drive long-term profit growth.”

Additionally, analysts from iREIT+Hoya Capital Investment Team stated, “Costco has delivered another strong earnings report, with steady growth in revenue and profit, mainly driven by robust performance in Canada and international markets… Looking ahead, Costco is expected to continue steady growth, with store expansion—especially in international markets—being a key driver. The company currently has only 924 warehouse stores, indicating significant growth potential… However, although the stock deserves a valuation premium, a forward P/E of 48 might lead to underperformance in the future. As macro uncertainties increase, this stock could rise due to its defensive qualities. I wouldn’t be surprised if there are announcements of stock splits in the medium to short term.”