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Degree of Operating Leverage (DOL) measures the percentage change in EBIT for a unit change in Revenue.
Costco Wholesale's Degree of Operating Leverage for the quarter that ended in May. 2026 was 1.35. The higher Degree of Operating Leverage, the higher operating risk the company will take.
The industry rank for Costco Wholesale's Degree of Operating Leverage or its related term are showing as below:
COST's Degree of Operating Leverage is ranked worse than 62.46% of 309
companies
in the Retail - Defensive industry
Industry Median: 0.7
vs COST: 1.35
Costco Wholesale (NAS:COST) Degree of Operating Leverage Explanation
Degree of Operating Leverage (DOL) is a leverage ratio that measures the sensitivity of a company’s operting income, also referred to as Earnings Before Interest and Taxes (EBIT), to fluctuations in its Revenue. DOL is a method used to quantify a company’s operating risk. This risk is related to the company's structure of variable costs and fixed costs. Since the fixed costs do not allow the company to adjust the operating costs, the operating risk rises with a higher fixed-to-variable costs proportion.
A high Degree of Operating Leverage indicates that the company’s fixed costs exceed its variable costs. By increasing the sales, the company can earn more profits. In addition, the company must be able to maintain relatively high sales to cover all fixed costs.
Be Aware
The use of operating leverage varies across different industries and business sectors, and the application of Degree of Operating Leverage (DOL) should be adjusted accordingly.
Costco Wholesale Degree of Operating Leverage Related Terms
Costco Wholesale Degree of Operating Leverage Historical Data
* Premium members only.
The historical data trend for Costco Wholesale's Degree of Operating Leverage can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Costco Wholesale Degree of Operating Leverage Chart
COST vs TGT, DG, DLTR: Degree of Operating Leverage Comparison
For the Discount Stores subindustry, Costco Wholesale's Degree of Operating Leverage, along with its competitors' market caps and Degree of Operating Leverage data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Costco Wholesale Degree of Operating Leverage vs Retail - Defensive Industry
For the Retail - Defensive industry and Consumer Defensive sector, Costco Wholesale's Degree of Operating Leverage distribution charts can be found below:
* The bar in red indicates where Costco Wholesale's Degree of Operating Leverage falls into.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
** TTM data of EBIT and Revenue was used to calculate Degree of Operating Leverage.
*** Please be aware that the Degree of Operating Leverage calculations are based on company-level data using the primary share class. The calculated data provided is for demonstration purposes and may slightly differ from the results displayed in the title due to potential variations caused by currency exchange rate differences throughout the year.
What does a Degree of Operating Leverage of 1.35 mean?
Costco Wholesale (COST) has a Degree of Operating Leverage of 1.35 as of May. 2026. Degree of Operating Leverage (DOL) measures the percentage change in EBIT for a unit change in Revenue. View historical data for Costco Wholesale and its competitors. According to the industry distribution chart, Costco Wholesale ranks #193 out of 309 companies in the Retail - Defensive industry, placing it in the top 62.5%.
Is Costco Wholesale's Degree of Operating Leverage too high?
Costco Wholesale's current Degree of Operating Leverage is 1.35. The Retail - Defensive industry median Degree of Operating Leverage is 0.70. Costco Wholesale's value of 1.35 is 92.9% above this industry median. Based on the distribution chart, Costco Wholesale ranks #193 out of 309 companies in the Retail - Defensive industry, which is below the industry midpoint. Overall, Costco Wholesale has a GF Score™ of 94/100 and is considered Modestly Undervalued, reflecting its overall financial health beyond just this single metric.
How does Costco Wholesale's Degree of Operating Leverage compare to TGT and DG?
According to the Retail - Defensive industry distribution chart, Costco Wholesale ranks #193 out of 309 companies for Degree of Operating Leverage. This places Costco Wholesale in the lower half of its industry. The industry median Degree of Operating Leverage is 0.70. Costco Wholesale's value of 1.35 is 92.9% above this benchmark. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Degree of Operating Leverage for a Retail - Defensive company?
The median Degree of Operating Leverage among Retail - Defensive companies is 0.70, based on 309 companies in the industry. Companies in the top quartile (top 25%) have a Degree of Operating Leverage significantly above this median, while those in the bottom quartile fall well below. However, Degree of Operating Leverage should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Costco Wholesale's current Degree of Operating Leverage of 1.35 is 92.9% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Degree of Operating Leverage mean?
A high Degree of Operating Leverage can signal that a stock is expensive relative to its fundamentals. Degree of Operating Leverage (DOL) measures the percentage change in EBIT for a unit change in Revenue. View historical data for Costco Wholesale and its competitors. For the Retail - Defensive industry, the median Degree of Operating Leverage is 0.70 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Costco Wholesale's current Degree of Operating Leverage is 1.35. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Costco Wholesale stock overvalued right now?
Based on GuruFocus' analysis, Costco Wholesale (COST) is currently considered Modestly Undervalued. The stock's GF Value™ is $1,041.18, compared to a current price of $901.35 — trading 13.4% below its estimated fair value. The current Degree of Operating Leverage is 1.35 and 92.9% above the Retail - Defensive industry median of 0.70. Costco Wholesale's overall GF Score™ is 94/100 with 1 warning sign to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Degree of Operating Leverage calculated?
Degree of Operating Leverage is calculated from a company's financial statements. For Costco Wholesale (COST), the current Degree of Operating Leverage is 1.35 as of May. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Costco Wholesale (COST) Overvalued in 2026?
Based on GuruFocus' analysis, Costco Wholesale stock appears to be undervalued.
The current stock price of $901.35 is trading 13.4% below its estimated GF Value™ of $1,041.18.
GuruFocus considers Costco Wholesale to be Modestly Undervalued.
Key valuation signals for COST:
Degree of Operating Leverage: 1.35
GF Value™: $1,041.18 vs. price of $901.35 (13.4% below fair value)
Industry Position: 92.9% above the Retail - Defensive median (#193 of 309)
No single metric tells the full story. See the COST stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Founded in 1983, Costco Wholesale now operates a global chain of membership-based warehouse clubs, delivering high-quality goods and services at consistently low prices. As of its most recent fiscal year, Costco operated approximately 910 warehouses, serving more than 80 million members across its three geographic segments: Costco US (approximately 73% of total revenue), Costco Canada (13%), and Costco International (14%).Costco's core value proposition—quality products at unbeatable prices—has yielded consistently strong member renewal rates (93% in the US and Canada and nearly 90% internationally). About 55% of Costco's fiscal 2025 revenue came from its grocery offerings, and another 25% from general merchandise.
94GF Score
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