Costco Stock Sell-Off: Time to Buy the Dip?
Costco stock has dipped after a monster run. Is this a rare chance to buy one of the market's best businesses at a discount?
After surging to a 52-week high of about $1,078 earlier this year, shares of membership-based retailer Costco Wholesale (NASDAQ: COST) took a huge hit. On the surface, the stock declined because the company reported worse-than-expected fiscal Q2 earnings per share and because of the higher costs Costco could face from tariffs. But if you look under the hood long enough, you'll discover even though the earnings report may have been initiated the pullback, the real issue is valuation. Costco stock has simply appreciated too much, too quickly. In other words, the hype around the stock simply led to expectations that were too high.
But now that the stock has retreated to levels back below $1,000, should investors be scooping up shares? Or is the stock still overvalued?
Costco's second-quarter results for fiscal 2025 weren't quite strong enough to meet the market's high expectations. But the business itself remains in excellent shape. Net sales for Costco's second quarter of fiscal 2025 rose 9.1% year over year to $62.53 billion. Total company comparable sales increased 6.8%. Growth was 9.1% when adjusted for gas and foreign exchange, aided by 8.6% adjusted growth in the U.S., 10.5% in Canada, and 10.3% in the company's "other international" region.
