Costco Wholesale (COST +1.16%) has been a market-beating stock for decades, but it's having a rare off year in 2025. It's down 6% year to date while the S&P 500 index is up 17%. Last week, it released another stellar earnings report, but it got a downgrade from a Wall Street analyst, and the stock plunged. Should investors steer clear, or is now the right time to invest if you have $1,000 available?
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Buy Costco stock on the dip?
Costco has demonstrated fabulous performance over the past four quarters despite economic pressure.
| Metric | Q1 | Q4 | Q3 | Q2 |
|---|---|---|---|---|
| Sales | 8.2% | 8% | 8% | 9.1% |
| Comparable sales | 6.4% | 5.7% | 5.7% | 6.8% |
Data source: Costco quarterly reports. Costco's fiscal 2026 first quarter ended Nov. 23.
It has a distinctive membership model that does well under nearly any kind of circumstance, from thriving economies to recessions. Customers love getting its rock-bottom prices when there's inflation, and the savings outweigh the cost of the membership for its millions of members. That model also breeds loyalty and volume, since members want to get the most bang for their buck.
So why the lower stock price? Some investors are wary about weakening comparable sales growth and changes to the model. For example, the company is bringing more digital features to the system. It's enjoying robust e-commerce sales, which increased 20.5% year over year in the 2025 fiscal fourth quarter (ended Nov. 23). However, it recently rolled out online registration and renewals, and that has slightly impacted the renewal rate; the worldwide rate was 90.2% in the third quarter and 89.7% in the first quarter.
NASDAQ: COST
Key Data Points
Although these might be minor offenses, Costco stock has become expensive. Even at the current price, it trades at a P/E ratio of 46, which is high for a slow-growing stock. That doesn't leave much room for error.
If you have a long time horizon, you can invest today and expect your stock to appreciate over time. Just understand that it might go sideways for a bit, which is something to understand about any stock before investing.
