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Costco’s Financial Performance: Costco (NASDAQ: COST) reported a strong fiscal Q3 2025, generating $63.2 billion in revenue and $2.5 billion in operating profit. Membership fees contributed $1.2 billion to this profit, highlighting the importance of its subscription model. Year-over-year sales rose 7%, surpassing the broader U.S. retail sector’s 3% growth.
Valuation Concerns: Despite impressive results, Costco trades at high multiples of 55x earnings and 59x free cash flow, translating to a mere 1.7% cash flow yield. In contrast, Amazon, which has faster growth, trades at lower multiples. Historical stock volatility, including a nearly 49% drop during the 2008 financial crisis, raises concerns about Costco’s future performance amidst its elevated valuation.
Operational Highlights: In Q3 2025, Costco’s earnings per share rose 13% year-over-year, while comparable store sales increased by 8%. With 905 warehouses globally, Costco maintains pricing advantages through its efficient supply chain and popular private-label brand, Kirkland Signature. Membership renewal rates remain strong at 92.7% in the U.S. and Canada, indicating a loyal customer base.
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