Key Points

Costco delivered solid Q3 results along with robust May sales growth.
Investors may see the figures as boosted by elevated fuel prices.
Costco shares could be priced high and not ideal for purchase at present.

Costco Wholesale (NASDAQ: COST) investors could be wondering about the share price reaction after positive sales and earnings updates.

On June 3 the retailer reported May sales of 24 billion dollars, a 14 percent gain from the prior year. Net sales over the first 39 weeks rose 10 percent versus last year. Comparable store sales advanced 12.5 percent in May and stand 8 percent higher for the 39 week stretch.

Digital sales provided notable support, climbing 21 percent year over year both for May and across the first 39 weeks.

Gas volumes also surged. When gas is excluded, comparable sales rose 8 percent, meaning fuel contributed roughly one third of the total comparable sales gain.

The May report followed a strong third quarter earnings release on May 29 for the period ended May 10. That quarter showed 10 percent comparable sales growth, a 21 percent digital sales increase, record gas volumes, and a 15 percent rise in earnings to 4.94 dollars per share.

Why then has the stock declined?

Costco shares decline

Strong results like these would normally lift the share price, yet Costco stock has eased over the past week. The June 3 sales release briefly pushed shares from 962 dollars to 997 dollars at the June 5 open, but the price later fell back near 960 dollars, a drop of nearly 5 percent.

Part of the June 5 decline reflected a broad market pullback after a hotter jobs report reduced hopes for near term rate cuts. Costco shares fell further than the overall market as investors focused on the elevated valuation and took profits amid concerns over prolonged effects from geopolitical tensions and the absence of rate relief. Even with the strong numbers, gross margin slipped 21 basis points after price reductions on select items and higher costs such as transportation. Some worry that a sizable portion of the gains stemmed from the temporary fuel price spike.

These issues appear modest, yet with the stock trading at 49 times earnings and 43 times forward earnings there is little tolerance for missteps. Investors appear to have noted possible headwinds and elected to lock in gains until the valuation becomes more attractive.

Costco remains an excellent long term holding, yet the shares look somewhat expensive at current levels.

Is Costco Wholesale stock a buy today?

Before purchasing Costco Wholesale shares, note the following.

The Motley Fool Stock Advisor team recently named what they view as the 10 top stocks for investors to own now, and Costco Wholesale did not appear on that list. The 10 selections could deliver substantial gains over the next several years.

For example, when Netflix was added on December 17 2004, a 1,000 dollar investment would now be worth 445,672 dollars. When Nvidia joined on April 15 2005, the same 1,000 dollar stake would now equal 1,280,566 dollars.

Stock Advisor has produced an average return of 948 percent, far ahead of the 206 percent gain for the S and P 500. Review the latest top 10 list through Stock Advisor and join a community of individual investors.

Stock Advisor returns as of June 9 2026.

Dave Kovaleski holds no positions in the securities mentioned. The Motley Fool owns shares of and recommends Costco Wholesale. The Motley Fool maintains a disclosure policy.

The opinions expressed are those of the author and do not necessarily represent the views of Nasdaq Inc.