Costco downgraded from Hold to Sell due to high valuation despite strong Q4 results

Costco Wholesale Corporation has been downgraded from Hold to Sell by Dividend Collection Agency, not because of worsening business fundamentals but due to its high valuation at over 40 times forward earnings. Although Costco reported strong Q4 results with sales up 11.2% and EPS up 15%, growth in key areas like membership income and store traffic is slowing. The analyst believes the risk of share price underperformance outweighs the company's high quality, suggesting shares need to drop 15-20% to become attractive again. Costco's strong balance sheet and free cash flow support future growth, but near-term upside is limited without a valuation correction.

Costco shares trade at USD 919.00 on Pluang as of Oct 05, 2026 18:42 WIB, slightly down 0.18% for the day. The stock's market cap stands at $408.09 billion, close to its 52-week high of $1.09K. This trading context highlights the high valuation concerns noted by the analyst, despite Costco's strong fundamentals and recent sales growth.