EARNINGS RESULTS · Q3 2026

Costco Q3 2026: Revenue Up 11.58%, Operating Margin 3.99%

Results for the quarter ended 2026-05-10 bring the business drivers and cash after investment into focus. Quarterly free cash flow was $2.04 bn. The dated assessment on 2026-10-07 was wait at a reference price of $935.68.

Costco · COSTPublished October 8, 2026Quarter ended May 10, 2026

Q3 2026: What the Quarter Delivered

Revenue: $70.53 bn
Revenue growth YoY: 11.6%
Operating income: $2.82 bn
Operating margin: 4%
Diluted EPS, GAAP: $4.93

Costco reported $70.53 bn of revenue in Q3 2026. Revenue rose 11.58% from the comparable prior-year quarter. Operating profit was $2.82 bn, with an operating margin of 3.99%. Reported diluted EPS was $4.93.

How Revenue Reached Operating Profit

The quarter's revenue and operating result imply an operating margin of 3.99%: $3.99 of operating profit for every $100 of revenue, before interest and tax.

Management warns that tariffs are more likely to hurt results, while digital sales carry a lower gross-margin percentage than warehouse operations; stronger sales therefore need not translate into richer margins.

What the Reported Earnings Include

Other non-operating income: $0 bn
GAAP net income: $2.19 bn
Diluted weighted-average shares: 0.44 bn shares

Q3 2026 GAAP net income was $2.19 bn. Other non-operating income was $0 bn.

Our subjective model separately assumes recurring net interest income and excludes unspecified other income; its normalized earnings are neither reported GAAP earnings nor company guidance.

The progress is principally an earnings story rather than a repurchase-driven optical boost.

Cash Left After Investment

Operating cash flow: $15 bn
OCF less cash PPE purchases, plus PPE sales: $8.81 bn
Quarterly operating cash flow: $3.45 bn
Quarterly cash CapEx: $1.41 bn
Quarterly OCF less cash PPE purchases: $2.04 bn

In Q3 2026, operating cash flow of $3.45 bn less cash capital expenditure of $1.41 bn left $2.04 bn of free cash flow. Operations funded cash investment and left cash after that spending.

Positive cash remaining afterward gives Costco capacity to expand without relying on borrowing to cover its investment bill.

The Verdict Recorded on 2026-10-07

Verdict Invest recorded wait on 2026-10-07, using a reference price of $935.68 dated 2026-10-06. This assessment relates to the Q3 2026 results, with a 12-month horizon and stated validity through 2026-11-06.

Confirmation to watch: Continued comparable-sales strength translating member spending into operating profit.
Confirmation to watch: Membership growth and greater Executive membership penetration supporting recurring fee revenue.
Confirmation to watch: Warehouse expansion adding productive sales capacity without persistent margin dilution.
Risk to this assessment: Sustained deterioration in member retention or Costco's perceived pricing advantage.
Risk to this assessment: Merchandise, tariff and compensation costs persistently outpacing sales productivity.
Risk to this assessment: Expansion absorbing cash without delivering improving warehouse economics.