Costco WholesaleCOST +0.34%97 Gross Margin % is 12.77% as of May. 2026, which is 1% below its 10-year median of 12.93. GuruFocus rates COST with a GF Score™ of 97/100 and a GF Value™ of $1,014.93 (Fairly Valued). The stock has 1 warning sign investors should review. Among 305 Retail - Defensive companies, Costco Wholesale ranks worse than 79.34% on this metric.
Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.
Durable competitive advantage creates a high Gross Margin % because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin %
1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key
Costco Wholesale had a gross margin of 12.77% for the quarter that ended in May. 2026 => No sustainable competitive advantage
Be Aware
If a company loses its competitive advantages, usually its gross margin declines well before its sales declines. Watching Gross Margin % and Operating Margin % closely helps avoid value trap situations.
Costco Wholesale Gross Margin % Related Terms
Costco Wholesale Gross Margin % Historical Data
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The historical data trend for Costco Wholesale's Gross Margin % 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.
For the Discount Stores subindustry, Costco Wholesale's Gross Margin %, along with its competitors' market caps and Gross Margin % 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 Gross Margin % vs Retail - Defensive Industry
For the Retail - Defensive industry and Consumer Defensive sector, Costco Wholesale's Gross Margin % distribution charts can be found below:
* The bar in red indicates where Costco Wholesale's Gross Margin % 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.
A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.
Costco Wholesale (COST) has a Gross Margin % of 12.77% as of May. 2026. Gross margin is the ratio of total gross profit to net sales. View historical data on Costco Wholesale and its competitors. This is near median its historical median of 12.93. Over the past decade, Costco Wholesale's Gross Margin % has ranged from 12.15 to 13.32. According to the industry distribution chart, Costco Wholesale ranks #242 out of 305 companies in the Retail - Defensive industry, placing it in the top 79.3%.
Is Costco Wholesale's Gross Margin % too high?
Costco Wholesale's current Gross Margin % of 12.77% is near median its 10-year median of 12.93. Over the past 10 years, this metric has ranged from a low of 12.15 to a high of 13.32. The Retail - Defensive industry median Gross Margin % is 24.14. Costco Wholesale's value of 12.77% is 47.1% below this industry median. Based on the distribution chart, Costco Wholesale ranks #242 out of 305 companies in the Retail - Defensive industry, which is in the bottom quartile relative to peers. Overall, Costco Wholesale has a GF Score™ of 97/100 and is considered Fairly Valued, reflecting its overall financial health beyond just this single metric.
How does Costco Wholesale's Gross Margin % compare to TGT and DG?
According to the Retail - Defensive industry distribution chart, Costco Wholesale ranks #242 out of 305 companies for Gross Margin %. This places Costco Wholesale in the lower half of its industry. The industry median Gross Margin % is 24.14. Costco Wholesale's value of 12.77% is 47.1% below this benchmark. Historically, Costco Wholesale's own Gross Margin % has ranged from 12.15 to 13.32 over the past decade. While the company's 10-year median is 12.93 vs. the industry median of 24.14, Costco Wholesale has consistently been below the industry average. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Gross Margin % for a Retail - Defensive company?
The median Gross Margin % among Retail - Defensive companies is 24.14, based on 305 companies in the industry. Companies in the top quartile (top 25%) have a Gross Margin % significantly above this median, while those in the bottom quartile fall well below. However, Gross Margin % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Costco Wholesale's current Gross Margin % of 12.77% is 47.1% below 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 Gross Margin % mean?
A high Gross Margin % can signal that a stock is expensive relative to its fundamentals. Gross margin is the ratio of total gross profit to net sales. View historical data on Costco Wholesale and its competitors. For the Retail - Defensive industry, the median Gross Margin % is 24.14 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Costco Wholesale's current Gross Margin % is 12.77%, which is near median its own 10-year median of 12.93. 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 Fairly Valued. The stock's GF Value™ is $1,014.93, compared to a current price of $961.09 — trading 5.3% below its estimated fair value. The current Gross Margin % is 12.77%, which is near median its 10-year median of 12.93 and 47.1% below the Retail - Defensive industry median of 24.14. Costco Wholesale's overall GF Score™ is 97/100 with 1 warning sign to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Gross Margin % calculated?
Gross Margin % is calculated from a company's financial statements. For Costco Wholesale (COST), the current Gross Margin % is 12.77% 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 $961.09 is trading 5.3% below its estimated GF Value™ of $1,014.93.
GuruFocus considers Costco Wholesale to be Fairly Valued.
Key valuation signals for COST:
Gross Margin %: 12.77% (near median its 10-year median of 12.93)
GF Value™: $1,014.93 vs. price of $961.09 (5.3% below fair value)
Industry Position: 47.1% below the Retail - Defensive median (#242 of 305)
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.
97GF Score
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