Costco Stock Is 14% Below Its Record. History Says Buyers Have Usually Been Rewarded.

The September rebound improves the operating case, but it does not resolve the equity’s main vulnerability: at roughly 45x FY26 EPS, COST is priced for durable growth and remains exposed to multiple compression even if earnings keep rising. The historical drawdown record is weak evidence for timing; notably, prior expensive-entry drawdowns could persist despite strong operating results. With an earnings yield near 2.2%, a rise in real yields or a shift away from defensive, high-quality growth could outweigh another solid comp month.

The demand signal needs one more read. Holiday timing explains part, but not all, of the sequential improvement; verify the next report’s calendar-adjusted U.S. comps, traffic versus average ticket, and whether strength persists without promotional or mix effects. Sustained traffic would support membership renewal and purchasing-frequency durability. Conversely, if Costco maintains value investment to defend share, strong sales need not translate proportionally into EPS growth. Competitors such as Walmart could face pressure to match value perceptions, but the degree of share transfer is not established by this report.

Near term, a confirmation print could support the shares; over 1–3 months, valuation and monthly sales updates likely dominate. Over 6–18 months, the key question is whether growth and membership economics can compound fast enough to justify the premium. The contrarian point: improving comps are a genuine positive, but the drawdown itself is not evidence of cheapness.