Where Will Costco Be in 5 Years?
Key Points
By opening new warehouses, Costco Wholesale will be generating higher revenue in 2031.
Analysts see double-digit earnings gains going forward, but the pace will likely decelerate.
Due to a steep starting valuation, Costco stock might underperform the broader market.
Costco Wholesale (NASDAQ: COST) is having a wonderful start to the year. So far in 2026, shares have climbed a notable 18% (as of Feb. 16). This extends a long streak of impressive gains. In the past five years, Costco has put up a total return of 205%.
Where will this retail stock be in the next five years?
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On track to be a larger business
As of Nov. 23, Costco had 921 warehouses in total. It raked in $66 billion in net sales in first-quarter 2026. This is a massive entity. The growth story is not ending anytime soon, though.
Five years from now, Costco will be a larger business. It has plans to open 28 new stores just this fiscal year. The leadership team has a goal of getting to 30 or more openings annually in the future. The expansion will be diverse, with opportunities in both the U.S. and in foreign markets. Low prices on quality merchandise clearly have global appeal.
Costco is viewed as a favorite in-person shopping destination, which won't change. But investors should expect online sales to become a more important driver in the future.
Steady earnings growth will continue
If Costco will be generating more revenue in five years, it's not surprising that the profit pool will be larger as well. Between fiscal 2020 and fiscal 2025, diluted earnings per share (EPS) grew at a compound annual rate of 15.1%, which was a faster clip than the top line's rise.
There's likely still some operating leverage inherent in the business model. Costco thrives because of its scale, which leads to cost advantages that support operational efficiencies. Wall Street analysts predict that EPS will increase at an annualized clip of 10.7% between fiscal 2025 and fiscal 2028. This pace will probably decelerate as time passes.
Shares face a notable headwind
Investors should be critical of the stock because of its steep valuation. Shares trade at a price-to-earnings (P/E) ratio of 54.6. That resembles a high-growth tech business, not a mature retailer.
Five years from now, is it reasonable to assume that the stock will still trade at a P/E multiple near 55? Consider that in 2031, Costco will be even later on in its life cycle. This means it will have a smaller growth opportunity ahead of it, even though it will still be a dominant force in the world of retail. That situation might command a lower valuation ratio.
As a result, investors should temper expectations. Costco isn't likely to produce the same monster returns it did in the past. There's a chance that the stock will lag the overall market over the next five years.
Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.