COST · Q3 FY2026
COSTCO WHOLESALE CORP /NEW Q3 FY2026 earnings analysis
By SageNoodle ResearchNeutral
| Metric | Actual | Estimate | Result |
|---|---|---|---|
| Revenue | $70.53B | $63.21B (yr ago) | Beat |
| EPS | $4.93 | $4.28 (yr ago) | Beat |
| Free Cash Flow | $2.04B | $2.33B (yr ago) | Miss |
| Gross Margin | 11.0% | 11.2% (yr ago) | Miss |
| Operating Margin | 4.0% | 4.0% (yr ago) | Miss |
What changed
Total revenue increased 11.6% year over year to $70.53 billion, while diluted EPS rose 15.2% to $4.93. Adjusted comparable sales grew 6.6%, but merchandise gross margin slipped to 11.0% and quarterly free cash flow declined to $2.04 billion from $2.33 billion, leaving the quarter operationally strong rather than thesis-changing.
Impact on the investment thesis
There was no prior fair value to revise. We initiate fair value at $795 per share: the quarter supports Costco’s quality and growth premium, but the current $902.38 price already discounts a richer outcome than our base case.