On August 18, 2026, Costco Wholesale Corp (NASDAQ: COST) announced a strategic partnership with SCAN Group to launch its own line of Medicare Advantage and supplemental Medicare plans across three states. This move marks Costco’s entry into the healthcare insurance market, leveraging its trusted brand to offer tailored healthcare solutions to its members.
- GF Value™ verdict: Current price $953.50 is approximately 7.7% below the GF Value™ of $1033.02, indicating undervaluation.
- GF Score™: 94/100, reflecting a robust overall financial and operational profile.
- Key financial signal: Insider activity shows no insider buying and $19.6 million in insider sales over the past 12 months, while the stock trades near its 2-year lows in valuation multiples.
What's Behind the News?
Costco’s announcement to partner with SCAN Group to offer Medicare Advantage plans in two states, along with a supplemental Medicare option in a third state, represents a significant diversification of its business model into healthcare services. This initiative aims to capitalize on Costco’s strong brand loyalty and extensive membership base to provide more accessible and customized healthcare insurance options. The move could enhance Costco’s value proposition beyond its traditional retail warehouse clubs, potentially opening new revenue streams in a growing and essential sector.
Founded in 1983, Costco Wholesale Corp operates a global chain of membership-based warehouse clubs, primarily focused on delivering high-quality goods and services at low prices. The company serves over 80 million members through approximately 910 warehouses worldwide. With a market capitalization of $422.86 billion, Costco is a major player in the Consumer Defensive sector, specifically within the Retail - Defensive industry. Its core business segments include Costco US (73% of revenue), Costco Canada (13%), and Costco International (14%). The company’s grocery and general merchandise offerings remain the backbone of its revenue, but strategic expansions like this healthcare partnership demonstrate its ambition to innovate and grow.
Is COST Overvalued or Undervalued?
According to GuruFocus’ proprietary GF Value™ metric, Costco is trading at $953.50 per share, which is about 7.7% below its intrinsic value estimate of $1033.02. This margin of safety suggests that the stock is undervalued relative to its historical trading multiples, business growth, and future earnings potential. Investors seeking a classic growth stock with a reasonable valuation might find this gap attractive, especially given Costco’s consistent revenue and earnings expansion over recent years.
Examining valuation multiples, Costco’s current trailing twelve-month (TTM) price-to-earnings (P/E) ratio stands at 47.96x, which is closely aligned with its 5-year median P/E of 47.41x. This proximity indicates that the stock is fairly valued based on historical earnings multiples, reinforcing the GF Value™ assessment of fair valuation with a slight undervaluation edge. The forward P/E ratio is not available, which limits forward-looking valuation comparisons but does not detract from the current valuation context.
For more on GF Value™, visit GF Value™.
What Does COST's GF Score™ Tell Us?
The GF Score™ aggregates multiple dimensions of a company’s financial health, profitability, growth, valuation, and momentum into a single comprehensive rating. Costco’s impressive GF Score™ of 94 out of 100 highlights its strong fundamentals and operational excellence. The company scores particularly high in Growth (10/10), Profitability (9/10), Financial Strength (8/10), and Valuation (10/10), reflecting consistent revenue and earnings growth, expanding operating margins, and attractive valuation metrics. Momentum is a relative weakness at 5/10, indicating moderate recent price movement compared to peers.
| Metric | Rating |
|---|---|
| GF Score™ | 94 |
| Financial Strength | 8 |
| Profitability | 9 |
| Growth | 10 |
| Valuation | 10 |
| Momentum | 5 |
This profile suggests that Costco is a fundamentally sound company with strong growth prospects and a valuation that supports its quality. The moderate momentum score may reflect recent market fluctuations or sector rotation but does not diminish the company’s underlying strength.
Explore further details on the COST stock page.
What Are Gurus and Insiders Doing with COST?
GuruFocus tracks 14 premium gurus holding Costco shares, with 6 adding to their positions and 9 trimming stakes in recent quarters. This mixed but overall stable guru ownership indicates continued institutional confidence tempered by selective profit-taking or portfolio rebalancing. Insider activity shows no insider purchases over the past 12 months, with insiders selling approximately $19.6 million worth of shares. This net insider selling could reflect personal liquidity needs or valuation views but is not uncommon for large-cap, mature companies like Costco.
What This Means for Investors
Costco’s entry into Medicare Advantage plans through its partnership with SCAN Group adds a new dimension to its growth story, potentially unlocking incremental revenue streams in healthcare. From a valuation standpoint, the stock appears modestly undervalued by 7.7% relative to its GF Value™, supported by a solid GF Score™ of 94 and strong financial fundamentals. While insider selling and mixed guru activity warrant monitoring, the overall picture suggests that Costco remains a high-quality growth stock trading at a reasonable price. Investors interested in a company with consistent growth, expanding margins, and strategic innovation may find Costco’s current valuation and prospects compelling.
For a deeper dive into Costco’s fundamentals and valuation, visit the COST stock page or screen similar opportunities using the GuruFocus Stock Screener.
Frequently Asked Questions
What is COST's GF Score™?
COST’s GF Score™ is 94 out of 100, indicating a very strong overall financial and operational profile, with particular strengths in growth, profitability, and valuation.
Is COST overvalued or undervalued?
Based on the GF Value™, COST is approximately 7.7% undervalued, trading at $953.50 compared to an intrinsic value estimate of $1033.02.
What is COST's P/E ratio compared to historical?
Costco’s current trailing twelve-month P/E ratio is 47.96x, which is very close to its 5-year median P/E of 47.41x, suggesting the stock is fairly valued relative to its historical earnings multiples.
This stock alert was generated using automated technology and GuruFocus financial data to provide readers with timely and accurate market reporting. This content was reviewed by GuruFocus editorial team prior to publication. Please send any questions or comments about this story to [email protected].
