Walmart Inc. WMT and Costco Wholesale Corporation COST are two of the world's largest retailers, operating expansive omnichannel businesses that combine grocery, general merchandise, e-commerce and membership-driven ecosystems.
Walmart serves customers through its global network of stores, digital platforms and Walmart+ membership, while Costco relies on its warehouse-club model, high membership renewal rates and disciplined low-price strategy to drive traffic and loyalty. Both companies have also been investing heavily in digital capabilities, faster fulfillment and technology to strengthen customer engagement and long-term profitability.
With market capitalizations of approximately $900 billion and $429 billion, respectively, WMT and COST are worth comparing as both continue to perform well despite inflationary and fuel-cost pressures. Solid comparable sales, strong digital growth and rising membership income underscore the resilience of their value-focused models, while investments in convenience, technology and AI support their long-term prospects.
The Case for Walmart
Walmart continues to strengthen its position as a leading global retailer by combining everyday value with an expanding omnichannel ecosystem. The first quarter of 2027 delivered broad-based sales growth, supported by higher customer transactions, market-share gains and strong e-commerce momentum. Global e-commerce sales rose 26%, while advertising, marketplace and membership businesses expanded rapidly, adding higher-margin revenue streams. These businesses now represent a meaningful portion of operating income and improve Walmart’s long-term earnings profile.
Walmart is also using its vast store and club network to improve delivery speed, product availability and convenience. Store-fulfilled delivery, marketplace expansion and supply-chain automation are supporting stronger digital engagement and better e-commerce economics. Meanwhile, AI-driven tools, including the Sparky shopping assistant, are helping personalize shopping experiences and improve operational decision-making. Continued growth in Walmart+, advertising and fulfillment services should further diversify profits beyond traditional merchandise sales.
However, Walmart faces several near-term cost and execution pressures. Higher fuel prices increased distribution expenses, while rising health-care costs and depreciation tied to ongoing capital investments constrained operating leverage. Persistent merchandise and supply-chain inflation could also force selective price increases, potentially testing demand among value-conscious shoppers.
Walmart’s sizable grocery mix, while defensive, also carries lower margins than many general merchandise categories, making sales mix an important profitability factor. Competitive intensity across retail, e-commerce, advertising and delivery remains high, requiring continued spending to protect market share and customer loyalty.
The Case for Costco
Costco’s durable business model is built on value pricing, recurring membership income and strong customer loyalty. Its limited-assortment warehouse format supports high inventory turnover, purchasing leverage and operating efficiency, while Kirkland Signature strengthens differentiation and reinforces members’ perception of quality at attractive prices. A growing membership base, high renewal rates and rising Executive Membership penetration provide a stable earnings stream and allow Costco to maintain low merchandise margins, helping it sustain traffic and market share across economic cycles.
Recent June sales trends underscore the strength of this model. Net sales increased 10.6%, while companywide comparable sales rose 7% after excluding gasoline-price and foreign-exchange effects. Digitally enabled comparable sales advanced 21.5%, showing that growth is being supported by both warehouse demand and stronger online engagement. Continued warehouse openings, same-day delivery capabilities and technology investments should further improve convenience and deepen member relationships.
Costco also benefits from healthy cash generation, a strong balance sheet and disciplined capital allocation. Its expanding warehouse footprint provides a visible runway for domestic and international growth, while scale and productivity initiatives should support long-term earnings expansion.
However, thin merchandise margins, wage and transportation inflation, tariff uncertainty and higher fuel costs remain concerns. That said, Costco’s loyal membership base, pricing strength, private-label leadership and expanding digital capabilities provide a solid foundation for durable sales and earnings growth.
Earnings Estimate Trends for WMT & COST
For Walmart, the Zacks Consensus Estimate for the current and next fiscal-year earnings per share (EPS) has been unchanged at $2.89 and $3.27, respectively, over the past 30 days. The estimates imply year-over-year growth of 9.5% and 13.3%, respectively.
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Over the past 30 days, the Zacks Consensus Estimate for Costco’s current and next fiscal year EPS has also been unchanged at $20.42 and $22.50, respectively. These estimates indicate year-over-year growth rates of 13.5% and 10.2%, respectively.
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Analysts remain optimistic on both retailers, reflecting confidence in their resilient business models, accelerating digital capabilities and ability to deliver consistent earnings growth despite a challenging consumer environment.
WMT & COST Stock Price Performance Over the Past Year
Both stocks have outperformed the broader retail sector over the past year, although Walmart has delivered stronger gains. Over the past year, Walmart shares have jumped 15%, while Costco rose a modest 3.4%, both outpacing the Zacks Retail – Wholesale sector’s decline of 1.1%.
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WMT vs. COST: A Look at Valuation
Walmart currently trades at a forward P/E of 36.76, below its one-year median of 38.67. Costco’s forward P/E of 42.32 also sits below its one-year median of 43.32, indicating that valuations for both retailers have eased from their recent historical levels. However, Costco continues to command a higher multiple than Walmart.
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Despite this moderation, both stocks trade at substantial premiums to the Retail–Wholesale sector’s forward P/E of 22.35. These elevated multiples reflect the market’s confidence in their resilient business models, strong customer loyalty, consistent execution and long-term growth prospects.
WMT or COST: Which Stock Is the Better Bet Now?
Both retailers offer resilient business models, strong digital momentum and solid long-term prospects. Walmart benefits from scale, omnichannel strength and expanding higher-margin businesses, but Costco holds a slight edge. Its recurring membership income, exceptional customer loyalty, disciplined execution and expanding warehouse footprint provide greater earnings visibility across economic cycles. Although Costco trades at a premium, its durable competitive advantages and consistent operating performance support the valuation. Overall, Costco appears to be the better bet now.
Costco currently carries a Zacks Rank #3 (Hold), whereas Walmart holds a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
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Walmart Inc. (WMT): Free Stock Analysis Report
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