Costco Wholesale (COST) Financials

Costco Wholesale (NASDAQ:COST) continues to show broad-based financial growth. The company’s latest Q4 2026 results indicate that revenue, profitability and operating cash flow all increased from the comparable Q4 2025 period. Total revenue rose 11.1% to $95.7 billion, while net income increased 14.9% to $3.0 billion. Diluted earnings per share rose to $6.75 from $5.87.

Profitability has remained resilient despite Costco’s low-margin warehouse model. Q4 gross profit increased 9.9% to $12.2 billion, and operating income grew 13.8% to $3.8 billion. The operating margin improved modestly to approximately 4.0%, while net margin increased to approximately 3.1%. Interest and investment income also contributed $208 million during the quarter, helping offset $45 million of interest expense.

Cash generation has strengthened. Q4 operating cash flow increased 21.1% year over year to $4.7 billion. Capital expenditures rose to $2.2 billion as Costco continued investing in property, warehouses and infrastructure, but free cash flow after capital expenditures still improved to approximately $2.5 billion from $1.9 billion a year earlier. Across the reported quarters, operating cash flow has generally remained well above net income, supporting dividends, share repurchases and expansion.

The balance sheet has also expanded considerably over the period. At the end of Q3 2026, Costco held $18.9 billion in cash and equivalents and $1.1 billion in short-term investments, compared with $13.8 billion and $1.0 billion, respectively, in Q3 2025. Total assets reached $86.4 billion, up from $75.5 billion a year earlier. Total equity increased to $33.5 billion, while long-term debt remained broadly stable at $5.7 billion.

Costco has returned substantial capital to shareholders. Q4 2026 financing cash outflows included $1.3 billion of dividends and $245 million of share repurchases. Reported cash dividends per share increased from $0.79 in Q1 2022 to $1.47 in Q3 2026, although the data includes a one-time-looking Q2 2024 dividend payment that creates volatility in quarterly comparisons.

• Revenue growth remains consistent: Q4 revenue increased 11.1% year over year, and quarterly revenue has grown substantially from approximately $50.4 billion in Q1 2022 to $95.7 billion in Q4 2026.
• Earnings growth is outpacing sales growth: Q4 net income rose 14.9% year over year, while diluted EPS increased from $5.87 to $6.75.
• Operating cash flow is strong: Q4 operating cash flow reached $4.7 billion, up from $3.9 billion in Q4 2025 and $2.5 billion in Q4 2022.
• Free cash flow improved: Q4 cash flow after capital expenditures was approximately $2.5 billion, despite higher investment in property and equipment.
• Liquidity has expanded: Cash and equivalents increased approximately 37% year over year to $18.9 billion at Q3 2026, providing flexibility for expansion and shareholder returns.
• Financial leverage appears manageable: Long-term debt was approximately $5.7 billion at Q3 2026, slightly below the comparable Q3 2025 level, while equity increased more than 23% year over year.
• Shareholder distributions remain well funded: Costco continues to pay regular dividends and repurchase shares using internally generated cash rather than relying heavily on new borrowing.
• Capital spending is rising: Q4 capital expenditures increased to $2.2 billion from $2.0 billion a year earlier, reflecting continued warehouse and infrastructure investment but also raising the company’s cash investment requirements.
• Working-capital benefits fluctuate: Changes in operating assets and liabilities contributed positively to cash flow in the latest quarters, but the size of these benefits varies significantly and may not be recurring.
• Margins remain structurally thin: Costco’s Q4 gross margin was approximately 12.7% and its operating margin was approximately 4.0%, leaving limited room for sustained cost inflation, wage pressure or weaker merchandise margins.

Overall, the statements point to a financially healthy company with durable sales growth, improving earnings, increasing liquidity and strong cash conversion. The main risks visible in the data are Costco’s narrow operating margins and the growing capital required to support expansion. Investors should also distinguish recurring operating performance from temporary working-capital movements and unusually large dividend payments when evaluating future cash flow.