Costco's $1.53 Billion Trading Day Sees Stock Drop to 32nd Ranking Despite Strong Sales Growth

On March 26, 2025, Costco's trading volume reached $1.53 billion, ranking 32nd in the day's market activity. The stock price of Costco (COST) decreased by 0.05%.

Costco's stock has experienced a significant decline after reaching a 52-week high of approximately $1,078 earlier this year. The drop was primarily due to the company's fiscal Q2 earnings per share falling short of expectations and potential tariff-related cost increases. However, the underlying issue appears to be the stock's valuation, which had risen too quickly, leading to overly high expectations.

Despite the earnings report not meeting market expectations, Costco's business fundamentals remain strong. Net sales for the second quarter of fiscal 2025 increased by 9.1% year over year to $62.53 billion, with total company comparable sales rising by 6.8%. Membership growth was robust, with paid household memberships increasing to 78.4 million and executive members growing to 36.9 million. Membership renewal rates remained high, at 93% in the U.S. and Canada and 90.5% globally.

E-commerce sales also showed strong growth, with adjusted year-over-year increases of 22.2% across various categories. Profitability improved as well, with earnings per share rising to $4.02, up from $3.92 a year ago. Operating income increased by 12.3% despite currency headwinds and higher supply chain costs.

However, with a price-to-earnings ratio of 54, Costco's stock valuation suggests high expectations for future growth. While the company's recent performance is promising, these expectations may be overly optimistic. Investors should consider whether the current stock price reflects a buying opportunity or if the stock remains overvalued.