Prediction: $5,000 in Costco Stock Will Trail the Market Through 2030

Shares of membership-based warehouse retailer Costco Wholesale (NASDAQ:COST) trade near $1,010 as I write, nearly 8% under the record close of $1,094.32 they set on May 19.

The company behind the stock keeps delivering. Costco's earnings per share grew 14% in fiscal 2026 (the 52 weeks ending Aug. 30, 2026), faster than the 10% increase a year earlier. And net sales climbed 10% to around $297 billion.

What might $5,000 put in the stock now be worth by the end of 2030?

With a forecast based on earnings growth, a lower valuation multiple, and the dividend, I get around $6,350. It's a decent gain. But the same $5,000 in an index fund matching the long-term average of the S&P 500 (SNPINDEX:^GSPC) might reach around $7,450.

How fast can earnings grow?

Costco's fiscal 2026 earnings included a one-time boost of $0.15 a share from tariff refunds in the fiscal fourth quarter. Without that, the company earned around $20.61 a share, still about 13% above fiscal 2025's $18.21.

Earnings per share were $11.27 in fiscal 2021, so this rate matches their average growth of around 13% a year for the last five years.

But the next few years likely won't match it. Costco hiked its yearly membership fees in the U.S. and Canada on Sept. 1, 2024, and it records that income gradually over each member's year. The higher fees made up around 30% of the 11% growth in membership fee revenue in fiscal 2026, according to Costco's annual report. By the fiscal fourth quarter, membership fee income was up only about 7% year over year.

That matters because membership fees brought in around $5.9 billion last fiscal year, or about half of Costco's $11.7 billion in operating income.

The rest of the business still has room to grow, of course. Comparable sales excluding gas prices and foreign exchange climbed 6.6% in fiscal 2026, and Costco plans to open up to 33 warehouses in fiscal 2027, including five relocations.

I'll assume earnings per share grow around 11% a year from here, a step down from the last five years but still a solid rate. That puts fiscal 2030 earnings per share at about $31.30.

Costco's valuation might come down

The price investors pay for these earnings arguably counts just as much. At around $1,010, Costco stock trades at about 49 times fiscal 2026 earnings. At the end of fiscal 2023, the stock fetched about 38 times that year's earnings of $14.16 per share.

I'll assume the price-to-earnings ratio lands at 40 times earnings by the end of 2030. That's still a premium price for a retailer, and I think it's fair for a business growing earnings roughly 11% a year.

At 40 times fiscal 2030 earnings of about $31.30, Costco stock would trade near $1,250. Now, $5,000 gets about 4.95 shares, so the stake might be worth around $6,190.

Costco also pays a dividend of $1.47 per share a quarter, after lifting it 13% in April. If the payout keeps climbing around 11% a year, in line with earnings, the 4.95 shares might collect a bit over $150 in regular dividends by the end of 2030 (I'm not counting any special dividends). That takes the total to around $6,350, a gain of about 6% a year.

An index fund might do better

With dividends, the S&P 500 has returned about 10% a year since 1928. At that rate, $5,000 put in the index through a fund on Oct. 23 could rise to about $7,450 by the end of 2030 -- about $1,100 more than my Costco forecast.

Then again, the market could return less than its long-run average in the next few years. And Costco's price-to-earnings ratio may not come down at all. The stock closed each of the last three fiscal years at more than 45 times earnings. But for Costco to keep up with the index fund, it'd have to trade at about 47 times earnings at the end of 2030, near where it trades today, while still growing earnings 11% a year.

Put another way, the company might do everything I'm assuming, and the stock could still trail the market if investors pay a bit less for every dollar Costco earns.

I think the warehouse club is still one of the best retailers to own for the long run, and I'd be comfortable adding shares slowly over time. But I wouldn't expect the stock to beat an index fund from here.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.