Costco Wholesale Corporation COST is demonstrating remarkable momentum in its private label operations, leveraging its Kirkland Signature brand to deliver exceptional value to members. It is evolving into one of the retailer’s most effective growth engines, helping strengthen member loyalty while supporting merchandising differentiation.
Management highlighted that Kirkland Signature continues to drive growth in food and sundries by pairing equal or better quality with savings of at least 15% to 20% compared with national brands. Rather than relying on promotions, Costco is expanding the assortment with products designed to meet emerging consumer preferences.
New launches during the third quarter of fiscal 2026 included Kirkland Signature Energy Drink, Kirkland Signature Ultra Filtered Milk, Kirkland Signature Sea Salt Popcorn and Kirkland Signature Oven Roasted Chicken Dog Food, reflecting the brand’s expansion into faster-growing categories.
The strategy extends beyond introducing new products. Costco also lowered prices on several Kirkland Signature staples, including Crispy Wings, Milk Chocolate Almonds, Golf Balls and King Size Sheets, underscoring management’s commitment to passing cost efficiencies back to members instead of protecting margins.
Management suggested that Kirkland Signature is keeping pace with changing consumption trends. The company pointed to strong demand for protein-focused products, noting that its newly launched Ultra Filtered Protein Milk has gained traction quickly as shoppers increasingly prioritize health and wellness.
What the Latest Metrics Say About Costco
Costco, which competes with Dollar General Corporation DG and Target Corporation TGT, has seen its shares drop 5.9% over the past three months compared with the industry’s 1.4% decline. While shares of Dollar General have risen 1.3%, those of Target have jumped 7.6% in the aforementioned period.
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From a valuation standpoint, Costco's forward 12-month price-to-earnings ratio stands at 41.93, higher than the industry’s ratio of 30.58. However, the stock is trading below its 12-month median level of 46.07, indicating some moderation in valuation despite sustained investor confidence in the stock.
Costco is trading at a premium to Target (with a forward 12-month P/E ratio of 15.88) and Dollar General (15.26).
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The Zacks Consensus Estimate for Costco’s current financial-year sales and earnings per share implies year-over-year growth of 9.6% and 13.5%, respectively. For the next fiscal year, the consensus estimate indicates a 7.8% rise in sales and 10.2% growth in earnings.
The consensus estimates for earnings per share for both the current and next fiscal year have increased by 6 cents to $20.42 and $22.50, respectively, over the past 60 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).