Is Costco Stock Too Expensive Now?
Some income investors may feel that Costco's dividend yield isn't high enough to justify the stock's premium price tag.
Overview
You may think that, since Costco Wholesale (NASDAQ: COST) shares are up only 4% year to date, they shouldn't be considered overly expensive. Yet compared to its main competitors, including Walmart, Costco commands a valuation premium that might be worth paying only if you're a certain type of investor.
Investors have been paying a premium for Costco stock for a while now, and it has been more than justified, as it has consistently delivered for its shareholders. Even though Costco's stock is nearly $200 off its 52-week high of $1,096.50, the wholesale club's valuation is lofty because its membership model gives it a high-margin recurring revenue stream. The company's member retention also remains well above 90% year over year. In its fiscal 2026 (which ended Aug. 30), net sales increased by more than 10% to $297 billion.
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Originally published at www.fool.com.