Costco posts 8.1% November sales gain; momentum looks intact but valuation remains full

What happened

Costco reported November net sales up 8.1% year‑over‑year to about $21.9 billion, reinforcing the mid‑to‑high single‑digit comp trend evident in FY2025. Jefferies’ repeat ‘Buy’ call highlights sell‑side optimism that broad‑based sales momentum will carry into fiscal 2026, but a single monthly print is noisy and can be skewed by fuel and FX timing. The report dovetails with DeepValue’s view of durable membership economics—membership fees and renewal metrics remain the primary earnings separator—but it does not resolve the core valuation question. At a roughly 51x P/E on FY2025 earnings, much of the company’s quality appears priced in, so incremental top‑line beats need to translate into sustainable margin or EPS upside to matter. We remain focused on renewal cohorts, membership fee growth, margin stability, and the impact of gasoline/FX on reported comps rather than the headline sales print alone.

Implication

The November beat reinforces the case that Costco’s membership flywheel is continuing to drive healthy traffic and sales, which is positive for near‑term earnings visibility. That said, one month of data is insufficient to justify moving from HOLD to BUY given a 51x P/E and the possibility that gasoline/FX and cohort renewals will distort reported trends. Investors should watch renewal rates and membership fee trajectory closely; sustained strength there would materially de‑risk the premium multiple. Also monitor gross margin and e‑grocery/delivery momentum — if comps remain mid‑to‑high single‑digit and margins hold, the probability of an upgrade rises. Until those conditions are met, the prudent stance is to treat this as confirmation of execution, not proof that upside is underpriced.

Thesis delta

Minimal shift: November sales corroborate the existing view that comps and membership economics remain strong, modestly increasing confidence in near‑term momentum. However, the core thesis — high quality offset by a premium valuation and watch items around renewals, gasoline/FX, and margin flow — is unchanged; we keep the HOLD stance until evidence accumulates that earnings and FCF growth will meaningfully outpace the current multiple.