Computed from published fixed rules, not a model's judgement — though one input, the count of high-severity risks, comes from the AI analysis below.
Not investment advice and not a price target: it scores the quarter's fundamentals, not the stock. Full methodology →
AI Takeaway
Costco delivered strong Q2 FY2026 results with revenue of $69.6B (+9.2% YoY) and net income of $2.0B (+13.8% YoY), driven by robust membership-driven traffic and disciplined cost management that expanded operating margins.
Revenue
$69.6B
+9.22% YoY
EPS (Diluted)
$4.58
+13.93% YoY
Operating Income
$2.61B
+12.52% YoY
Source: SEC XBRL
Costco Wholesale (COST) reported Q2 FY2026 revenue of $69.6B, up 9.2% year over year. Operating margin was 3.7%, up 0.1 points from 3.6% a year earlier. COST's fiscal Q2 FY2026 corresponds to calendar Q1 2026.
Last 4 quarters: 1 beat
| Quarter | Actual EPS (USD) | Consensus (USD) | Result |
|---|---|---|---|
| Jun 2026 | 4.93 | 5.03 | Miss -1.9% |
| Mar 2026This filing | 4.58 | 4.65 | Miss -1.5% |
| Dec 2025 | 4.50 | 4.36 | Beat +3.3% |
| Sep 2025 | 5.87 | 5.92 | Miss -0.8% |
Reported EPS of $4.58 versus the $4.65 analyst consensus — a -1.5% miss for Mar 2026.
Compiled by AI from this SEC filing
Total revenue reached $69.6B in Q2 FY2026, up 9.2% YoY from $63.7B, reflecting continued strength in membership traffic and basket size across Costco's warehouse network. The consistent top-line growth underscores the resilience of the membership warehouse model.
Source: 10-Q Income Statement
Operating income grew 12.5% YoY to $2.6B, faster than revenue growth of 9.2%, indicating modest operating leverage. Operating margin expanded slightly to 3.74% from 3.63% in the prior-year period, a meaningful improvement in a low-margin retail business.
Source: 10-Q Income Statement
SG&A expenses rose 10.8% YoY to $6.3B, slightly outpacing revenue growth of 9.2%, reflecting investments in labor, technology, and store operations. Management's ability to keep this increase contained relative to revenue growth supports the margin expansion story.
Source: 10-Q Income Statement
Cash and equivalents jumped to $17.4B from $12.4B a year ago, a 40.7% increase, significantly strengthening Costco's liquidity profile. This robust cash build supports ongoing capital returns and potential strategic investments.
Source: 10-Q Balance Sheet
Cumulative fiscal year-to-date operating cash flow reached $7.7B, up 27.9% from $6.0B in the same prior-year period, demonstrating strong cash generation. Dividends paid year-to-date surged 124.1% to $1.15B, reflecting a special or elevated dividend distribution to shareholders.
Source: 10-Q Cash Flow Statement
Compiled by AI from this SEC filing · 2 high, 2 medium, 1 low
Costco operates with an operating margin of just 3.74%, meaning any unexpected cost increases—such as wage inflation, supply chain disruptions, or tariff impacts—could materially compress profitability. The low-margin, high-volume model requires consistent traffic and volume to sustain earnings. Even modest cost headwinds can disproportionately impact net income.
Source: 10-Q Income Statement
SG&A grew 10.8% YoY versus revenue growth of 9.2%, suggesting cost pressures in labor and operations are building. If this trend continues, it could erode the modest margin expansion achieved in Q2 FY2026. Sustained wage inflation or increased technology investment could accelerate this divergence.
Source: 10-Q Income Statement
The current ratio stands at just 1.06x, meaning current assets of $43.1B barely cover current liabilities of $40.8B. While this is typical for large retailers with strong supplier terms, it leaves limited buffer if business conditions deteriorate or credit markets tighten. Any disruption to inventory financing or payables management could stress near-term liquidity.
Source: 10-Q Balance Sheet
Debt-to-equity stands at 1.61x with long-term debt of $5.7B, and total liabilities of $51.6B dwarf stockholders' equity of $32.1B. While the debt level is manageable given Costco's cash generation, rising interest rates could increase refinancing costs. The leverage ratio warrants monitoring as the company continues to invest in expansion.
Source: 10-Q Balance Sheet
Costco's profitability is structurally dependent on membership fee income, which effectively subsidizes its ultra-thin merchandise margins. Any deterioration in membership renewal rates or failure to attract new members—particularly in international markets—could disproportionately impact operating income. Competitive pressure from other warehouse clubs and e-commerce players poses a latent threat to membership growth.
Source: 10-Q Income Statement
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue $B | 69.60 $B | 63.72 $B | +9.22% |
Cost of Revenue $B | 60.72 $B | 55.74 $B | +8.92% |
Operating Income $B | 2.61 $B | 2.32 $B | +12.52% |
Net Income $B | 2.04 $B | 1.79 $B | +13.81% |
EPS (Basic) $ | 4.58 $ | 4.03 $ | +13.65% |
EPS (Diluted) $ | 4.58 $ | 4.02 $ | +13.93% |
SG&A Expense $B | 6.27 $B | 5.66 $B | +10.75% |
Answers draw on this SEC filing and the data on this page
Costco delivered strong Q3 FY2026 results with revenue of $70.5B (+11.6% YoY) and net income of $2.19B (+15.2% YoY), driven by robust membership-driven sales growth while maintaining its characteristically lean ~4% operating margin.
Costco delivered a strong fiscal Q4 2025 with revenue of $67.3B (+8.3% YoY), net income of $2.0B (+11.3% YoY), and operating cash flow surging 43.8% to $4.7B, reflecting continued membership-driven growth and disciplined cost management.
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