Costco Wholesale Corporation’s COST ancillary businesses have become a pivotal driver of member engagement, expanding the company’s share-of-wallet opportunity across its global member base. During the fourth quarter of fiscal 2026, the gross margin for ancillary and other businesses increased 23 basis points year over year and 32 basis points excluding gasoline inflation. Comparable sales in ancillary operations performed exceptionally well, surging in the high 20s percentage range, driven primarily by strong performance in gasoline, pharmacy and travel offerings.
Costco’s gasoline business reached a milestone in fiscal 2026, achieving record volumes as U.S. member household penetration hit an all-time high. Members saved an estimated $3.2 billion at the pump compared to regional market averages. To support throughput and accommodate volume growth, Costco expanded 26 high-volume U.S. gas stations.
The pharmacy department experienced nearly 20% sales growth, driven by digital options such as Rx Mobile Pay Ahead and Pickup Lockers, alongside specialized GLP-1 and fertility programs. These initiatives yielded double-digit script growth, helping offset Medicare Maximum Fair Price adjustments. Costco announced a partnership with SCAN Health Systems to develop Medicare Advantage benefits.
Meanwhile, Costco Travel achieved double-digit growth across vacation packages, cruises and car rentals. Cruise bookings alone expanded by 16%, with more than 750,000 members sent on cruises during the fiscal year. Together, these ancillary services deepen member loyalty and capture greater household spending beyond core merchandise categories.
How Does Costco Stack Up Against Its Industry?
Costco, which competes with Dollar General Corporation DG and Target Corporation TGT, has seen its shares drop 4.3% over the past three months compared with the industry’s 2.5% decline. While Dollar General shares have risen 1.2%, Target has jumped 20.4% over the same period.
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What Does Costco’s Current Valuation Suggest?
From a valuation standpoint, Costco's forward 12-month price-to-earnings ratio stands at 40.02, higher than the industry’s ratio of 27.39. However, the stock is trading below its 12-month median level of 45.07, indicating some moderation in valuation.
Costco is trading at a premium to Target (with a forward 12-month P/E ratio of 16.08) and Dollar General (14.54).
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What Do Earnings Estimates Signal for Costco?
The Zacks Consensus Estimate for Costco’s current fiscal-year sales and earnings per share implies year-over-year growth of 8.3% and 11.8%, respectively. For the next fiscal year, the consensus estimate indicates a 7.2% rise in sales and 9.1% growth in earnings.
The Zacks Consensus Estimate for earnings for the current fiscal year has increased by 36 cents to $22.87 per share, while the estimate for the next fiscal year has risen by 44 cents to $24.94 per share over the past seven days.
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Costco currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).