Stock Analysis | Costco Wholesale Outlook - Mixed Signals Ahead of Earnings

Market Snapshot

Headline Takeaway: Costco's stock faces weak technical momentum and a falling price trend, with mixed signals from analysts and strong inflows from big-money investors.

The recent 5-day price fall of -3.68% aligns with weak technical signals, but positive fund-flow patterns offer some hope for short-term resilience.

News Highlights

1. Costco Earnings Preview: Costco is set to report Q1 earnings on May 29, with analysts expecting an EPS of $4.21. The market will be closely watching for guidance amid macroeconomic uncertainty.

2. Insider Buying at BJ's Wholesale Club: On May 29, BJ's board member Steven Ortega purchased $199K in stock, which could signal confidence in the wholesale sector and indirectly benefit Costco as a peer.

3. Institutional Buying: JP Morgan and Telsey Advisory Group continue to issue "Buy" ratings despite recent price weakness. However, JP Morgan's historical track record is poor, with a 0.00% winning rate and an average -2.75% return on its past two calls.

Analyst Views & Fundamentals

Costco has received a total of 3 "Buy" ratings in the last 20 days from two analysts. The simple average rating score is 4.00, while the performance-weighted score is 3.95. This shows a fairly consistent rating pattern among active analysts, though the ratings are not strongly aligned with the current price trend of falling -3.68%.

Key Fundamental Factors (values and internal diagnostic scores 0-10):

• Net Cash Flow from Operating Activities per Share (YoY growth rate %): -6.14% (score: 2)
• Shareholders’ Equity / Total Liabilities (%): 53.68% (score: 2)
• Equity Multiplier: 286.29% (score: 3)
• Net Income / Revenue: -9.31% (score: 2)
• Current Assets Turnover Ratio: 353.86% (score: 1)
• Cash-UP: 0.68% (score: 2)
• Net Cash Flow from Operating Activities / Total Liabilities (%): 12.61% (score: 1)
• GPOA: 10.90% (score: 2)
• ROE (Diluted %): 14.02% (score: 3)
• Equity Multiplier (DuPont Analysis %): 290.77% (score: 2)

The mixed score distribution—hovering between 1 and 3—suggests a moderate to weak balance sheet with decent leverage but poor operating cash flow growth. Investors may want to watch upcoming earnings to see if these trends improve.

Money-Flow Trends

Big-money investors are currently positive on Costco, with an overall inflow ratio of 50.47% and a fund-flow score of 7.65 (good). This indicates that large and extra-large investors are buying more than selling, which contrasts with the bearish technical trend.

• Big-money trend: Positive
• Big-money inflow ratio: 50.49%
• Large investors trend: Negative
• Small and medium investors trend: Positive

The divergence between big-money flows and technical signals highlights a tug-of-war between long-term confidence and short-term caution.

Key Technical Signals

Costco's technical analysis shows 1 bearish indicator (MACD Death Cross) and 0 bullish indicators, with 1 neutral (Williams %R Oversold). The overall technical score is 4.53 (Weak Technology, Need to Be Cautious).

Indicator Details and Internal Diagnostic Scores:

• WR Oversold: Score 2.75 (Neutral Rise), suggesting the stock may be testing support levels.
• MACD Death Cross: Score 6.3 (Neutral Rise), a bearish signal that historically shows a 62.5% win rate with 0.31% average returns.

Recent Chart Patterns (Last 5 Days):

• 2025-08-22: WR Oversold
• 2025-08-25: WR Oversold + MACD Death Cross
• 2025-08-29: WR Oversold

This pattern indicates a volatile, sideways trend with no clear direction. The market is likely waiting for a catalyst—such as earnings—to break the stalemate.

Conclusion

Costco is at a crossroads. The weak technical trend, moderate fundamental health, and mixed analyst signals suggest that investors should proceed with caution. However, the strong big-money inflows (fund-flow score of 7.65) indicate that some institutional investors remain confident.

Actionable Takeaway: With earnings due soon and volatility likely, consider waiting for a clearer direction post-earnings before making a decision. If the stock breaks above key resistance with strong volume, it could signal a turn in momentum.