Shares of membership-based wholesale retailer Costco Wholesale (COST +1.13%) moved higher this week, after the company released its December monthly sales results. While the sales update didn't feature a full earnings report, it did give investors something they always want from Costco: another sign that the company can maintain its impressive sales growth rates.
Two sales metrics, in particular, stood out. Costco's comparable sales in the U.S. ticked up from November, and the company's digitally enabled comparable sales also accelerated, suggesting the retailer may be gaining momentum with its shoppers.
Given the premium valuation the stock typically commands, investors are always watching sales data closely -- and its December sales data was a nice confirmation that the company's compounding machine continues to operate smoothly.
But was this latest data from Costco really enough to fully justify the stock's high valuation?
Let's take a closer look.
Image source: Getty Images.
December sales data impressed
Costco reported net sales of about $29.9 billion for its retail month of December (the five weeks ended Jan. 4, 2026) -- up 8.5% from the prior year. While this was an acceleration over the company's 8.1% year-over-year sales growth in November, investors are typically more interested in Costco's comparable sales (sales at warehouses open for more than one year) growth -- particularly its adjusted comparable sales growth, which excludes the impact of changes in gasoline prices and foreign exchange.
Costco's December comparable sales rose 7% in December, or 6.2% on an adjusted basis. But here's the particular detail behind this metric that may excite investors about Costco's comparable sales trends. Costco's U.S. adjusted comparable sales were up 6.3% in December -- an acceleration from 5.8% growth in November. While this acceleration is modest, it's robust enough to potentially suggest a reacceleration in the U.S. consumers' shopping habits at Costco.
Though it is worth noting that on a total-company basis, adjusted comparable sales were 6.2% in December, compared to 6.4% in November. The total company adjusted comparable sales figure was weighed down by a deceleration in Canada and the company's "other international" segment.
The other key metric that investors are likely excited about is Costco's digitally enabled comparable sales, which reflect comparable sales tied to digital ordering behavior. In December, Costco's digitally enabled comparable sales, when adjusted to exclude changes in gasoline prices and foreign exchange, rose 18.3% -- accelerating from 16.3% in November. This is an important signal for investors since the steady rise in e-commerce is a constant narrative Costco shareholders have to keep an eye on. After all, the Costco shopping experience is largely built around the idea of a treasure hunt-like experience in its warehouses. For now, however, Costco appears to be benefiting from e-commerce, rather than being hurt by it.
A great business, but still overpriced
Overall, Costco's December update lines up with what it reported in its fiscal first quarter of fiscal 2026 (ended Nov. 23, 2025). Net sales in the period rose 8.2% year over year to about $66 billion. And operating income outpaced its top-line growth, rising 12.2% year over year. Bolstering its profits, membership fee income rose 14% year over year to $1.33 billion.
NASDAQ: COST
Key Data Points
The business model helps explain this steady momentum. Costco collects membership fees from its loyal members, and these recurring fees -- alongside the company's relentless efforts to keep prices low -- keep customers coming back. Even more, the company's reputation for low prices means its members are always exploring ways they might be able to shift some of their spending at higher-priced retailers over to Costco.
Of course, there are still risks. Walmart continues to invest in Sam's Club, and Amazon remains a constant threat as more and more shopping gradually shifts online. Even within Costco's own membership model, management has noted that renewal rates can drift lower as more customers sign up digitally. Chief Financial Officer Gary Millerchip said on Costco's fiscal first-quarter earnings call that "we may still see a slight decline in the overall renewal rate over the next few quarters."
Overall, however, Costco's low-priced membership model clearly continues to work well.
But what about the stock price? As of this writing, Costco commands a price-to-earnings ratio of 49. That means investors are paying $49 for every $1 of profit Costco produced over the last year. Is the stock really worth this valuation?
While Costco stock certainly deserves to trade at a high premium, I believe the current valuation is flirting with euphoria. If sales slow for some unexpected reason, like a weakening economy or Costco's key markets becoming saturated sooner than expected, the stock could get crushed as investors demand a lower valuation.
Ultimately, I think the December sales report is another reason shareholders who already own Costco can feel good about continuing to hold. But at today's valuation, shares still look overpriced, in my opinion. For new buyers, therefore, the business is excellent -- but the margin of safety is not.
