Costco and Walmart are not interchangeable retail stocks. Costco (Nasdaq: COST) earns a large share of its economics from paid warehouse memberships, while Walmart (NYSE: WMT) operates a much broader omnichannel network spanning Walmart U.S., Walmart International and Sam’s Club. The right comparison is therefore not “which retailer has higher sales?” It is whether each company’s growth, margins, cash generation, risks and valuation justify the expectations already embedded in its own share price.
The latest reported years are also different: Costco’s fiscal year ended August 30, 2026, while Walmart’s ended January 31, 2026. Use those dates whenever you compare figures, and obtain same-day market data for both tickers before drawing a relative valuation conclusion.
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What Costco and Walmart actually do
Costco’s model is built around membership warehouses, a deliberately limited assortment, low prices and rapid inventory turnover. Members pay annual fees for access to the warehouses and online channels. The company also operates e-commerce and ancillary businesses, but the warehouse-and-membership relationship remains the central operating engine. Costco describes structurally lower gross margins than many retailers as part of its strategy: keeping prices compelling can encourage high sales volume and frequent visits.
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One free scan finds every outdated or missing driver and matches the right update for your exact hardware.Free scan · exact hardware matchWalmart uses a diversified omnichannel model. Its segments are Walmart U.S., Walmart International and Sam’s Club in the United States. Customers can shop in stores, order online, pick up purchases or receive delivery. Walmart also earns revenue from activities such as marketplace services and advertising, alongside traditional retail sales. Its broader format and geographic footprint create more operating complexity than Costco’s warehouse model.
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Read Costco’s corporate overview for its description of the membership-warehouse approach at Costco Investor Relations. Segment definitions and Walmart’s omnichannel operations are detailed in its FY2026 Form 10-K.
Start with the fiscal-period problem
Costco’s FY2026 ended on August 30, 2026. Walmart’s FY2026 ended on January 31, 2026. Those year-ends are seven months apart, so a direct comparison of the reported annual numbers is a snapshot of different economic periods. Inflation, foreign-exchange rates, consumer demand and commodity costs may have changed between the two dates.
Costco reported net sales of $297.247 billion, total revenue of $303.154 billion and operating income of $11.685 billion for its FY2026. Walmart reported net sales of $706.413 billion and operating income of $29.825 billion for the fiscal year ended January 31, 2026. Walmart’s April 23, 2026 annual-report announcement also describes total FY2026 revenue of $713 billion, a broader measure than net sales. Do not combine Walmart’s $713 billion revenue figure with Costco’s net sales or treat the figures as identical definitions.
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| Measure | Costco FY2026 | Walmart FY2026 | How to read it |
|---|---|---|---|
| Fiscal year-end | August 30, 2026 | January 31, 2026 | Different periods; not a same-date operating comparison |
| Net sales | $297.247 billion | $706.413 billion | Walmart is larger by sales, but scale alone does not establish stock value |
| Total revenue | $303.154 billion | $713 billion reported in Walmart’s April 2026 announcement | Definitions differ; Walmart’s announcement uses a broader revenue figure |
| Operating income | $11.685 billion | $29.825 billion | Compare margins and segment mix, not just dollar totals |
Costco’s FY2026 Form 10-K and Walmart’s FY2026 Form 10-K are the primary sources for these figures.
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Compare the operating engines before the stocks
| Comparison axis | Costco evidence to inspect | Walmart evidence to inspect | Question for an investor |
|---|---|---|---|
| Business mix | Membership warehouses, e-commerce and ancillary operations | Walmart U.S., Walmart International, Sam’s Club U.S., e-commerce, marketplace and advertising | Which engine is producing incremental growth? |
| Growth | Comparable sales, ticket, shopping frequency, warehouse openings, digitally enabled sales | Comparable sales, segment sales, e-commerce, store and club expansion | Is growth broad-based and repeatable? |
| Profitability | Gross-margin trend, operating income and membership-fee contribution | Segment and consolidated operating income, margin changes and higher-margin businesses | Are profits improving because of durable economics or temporary factors? |
| Resilience | Renewal rates, member growth, geographic concentration and supply-chain exposure | Grocery scale, international exposure, tariffs, labor and operating costs | What could weaken demand or profitability? |
| Shareholder return | Same-date price, earnings, cash flow, dividends and any special distributions | Same-date price, earnings, cash flow, dividends and capital returns | What expectations are already priced in? |
Costco: membership economics and warehouse growth
Membership fees are a recurring earnings layer
Costco’s membership-fee revenue rose 11% to $5.907 billion in FY2026. At fiscal year-end, reported renewal rates were 92.3% in the United States and Canada and 89.8% worldwide. Renewal revenue is economically different from a one-time merchandise sale: once a member renews, Costco can earn the fee while continuing to sell products at its intended low prices.
The worldwide rate is lower than the U.S. and Canada rate partly because Costco is adding members in certain international markets and has a higher proportion of online memberships there, according to the company’s filing. That qualification matters. A falling worldwide renewal rate would not automatically mean the core North American membership base is deteriorating, while a high renewal rate does not eliminate risks from competition, costs or slower member additions.
Sales growth should be decomposed
Costco’s FY2026 net sales increased 10%, comparable sales increased 8% and digitally enabled comparable sales increased 21%. These measures answer different questions. Total sales include new warehouses and acquisitions of customer activity; comparable sales focus on locations or channels open long enough to compare; digitally enabled comparable sales isolate a digital component. Look for consistency among traffic, average ticket, shopping frequency and warehouse openings rather than relying on one percentage.
Geographic concentration changes the risk profile
U.S. and Canadian operations represented 86% of Costco’s net sales and 83% of operating income in FY2026. International expansion can provide a longer runway, but it also introduces currency, local competition, regulatory and execution risks. A Costco investor should track whether new markets are reaching the membership density and renewal behavior needed to support the warehouse model.
Working capital is part of the model
Costco states in its FY2026 filing: “We often sell inventory before we are required to pay for it, even while taking advantage of early payment discounts.” This is the company’s description of a working-capital advantage, not an independently verified performance claim. When reading the cash-flow statement, examine inventory turns, accounts payable, operating cash flow and capital spending together. A retailer can report strong earnings while cash is absorbed by inventory or new warehouses.
Walmart: scale, segments and omnichannel execution
Separate the three operating segments
Walmart’s consolidated figures conceal meaningful differences among Walmart U.S., Walmart International and Sam’s Club U.S. The U.S. business benefits from grocery scale and a dense store network; International results reflect multiple currencies and local retail conditions; Sam’s Club uses a membership format that has some similarities to Costco but operates within Walmart’s broader portfolio.
When reviewing Walmart, read segment sales and operating income separately, then reconcile them to the consolidated totals. A strong quarter in Walmart U.S. can offset weakness internationally, but that does not mean every part of the business is improving. Conversely, international or club growth may diversify the company even if the U.S. margin is under pressure.
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E-commerce is material but measured differently
Walmart reported approximately $99.6 billion in Walmart U.S. e-commerce sales for FY2026. Its omnichannel system combines stores with online ordering, pickup and delivery. Costco reported a 21% increase in digitally enabled comparable sales. Those are not apples-to-apples statistics: Walmart’s figure is a dollar sales amount for a segment and year, while Costco’s is a comparable-growth rate. Use each to assess the company’s own digital progress, not to rank one retailer’s online business directly against the other.
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Operating margin explains the low-margin model
Walmart’s FY2026 operating income was $29.825 billion, equal to 4.2% of net sales. A 4.2% operating margin leaves less room for execution errors than a high-margin business, but Walmart’s scale, grocery traffic and recurring customer demand can support substantial dollar profits. Costco’s filing similarly emphasizes a low-price, high-volume strategy and structurally lower gross margins. Compare margin direction, not just the level: ask whether expenses, shrink, wages, freight, technology investment or mix explain a change.
Build a same-date valuation comparison
The available market snapshot is for Walmart only: a $113.08 closing price on October 12, 2026, trailing P/E of 40.98, forward P/E of 37.69 and dividend yield of 0.88%, according to Stock Analysis, accessed October 13, 2026. No equivalent Costco snapshot was established for that date. Therefore, these Walmart figures cannot support a claim that Walmart is cheaper or more expensive than Costco.
To compare valuation responsibly, collect both tickers’ data at the same closing date and record the definitions used. Then follow this process:
- Record price and share count. Use the same market close for COST and WMT, and calculate market capitalization from the corresponding diluted share count or a consistently sourced share-count figure.
- Match the earnings basis. Label trailing twelve-month, latest fiscal-year and forward earnings separately. Do not compare Walmart’s forward P/E with Costco’s trailing P/E.
- Check cash flow. Compare operating cash flow and free cash flow after maintenance and growth capital spending. Retailers can show similar P/E ratios while having very different cash conversion.
- Adjust for business mix. Membership fees, advertising, marketplace commissions and other higher-margin activities can change the quality of reported earnings. Identify how much each contributes and whether growth is recurring.
- Review balance-sheet capacity. Examine debt maturities, lease obligations, cash, liquidity and the ability to fund warehouses, stores, technology and buybacks without weakening the balance sheet.
- Interpret the multiple as an expectation. A high P/E may reflect expectations for durable growth and resilience; a lower multiple may reflect genuine risk rather than a bargain. The ratio itself does not predict future returns.
Market prices and valuation ratios move daily. A comparison made on one date can become outdated after an earnings release, interest-rate move or major change in guidance.
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Assess growth quality, not just growth rates
For Costco
- Track paid-member additions, renewal rates and the mix of Executive members where disclosed.
- Separate comparable-sales growth from new-warehouse growth.
- Look at traffic, average ticket and shopping frequency to determine whether sales are broad-based.
- Monitor digitally enabled sales alongside warehouse productivity; rapid digital growth can carry different fulfillment economics.
- Compare membership-fee growth with operating expenses and capital spending.
For Walmart
- Review comparable sales by Walmart U.S., Walmart International and Sam’s Club.
- Separate e-commerce growth from store-based sales and evaluate fulfillment costs.
- Track the contribution of marketplace, advertising and other services, while checking whether those activities improve operating income.
- Examine store, club and supply-chain expansion against cash flow and returns on invested capital.
- Watch currency effects and constant-currency growth for international operations.
Profitability and cash-flow questions to answer
Gross margin, operating margin and free-cash-flow margin answer different questions. Costco’s low-price promise can restrain gross margin, so a stable or slightly declining gross margin may be consistent with its strategy if inventory turns, member loyalty and cash generation remain strong. Walmart’s 4.2% FY2026 operating margin should be read alongside segment mix, grocery volume, wage costs, shrink, freight and investments in stores and technology.
For both companies, inspect the cash-flow statement for:
- Operating cash flow compared with net income.
- Inventory growth relative to sales growth.
- Capital expenditures for warehouses, stores, clubs, automation and digital infrastructure.
- Lease payments and other fixed commitments that do not appear as conventional debt alone.
- Dividends, repurchases and any special distributions after funding the business.
Costco’s statement about selling inventory before paying suppliers describes a potential working-capital benefit. Validate its effect through multi-year operating-cash-flow and payables trends rather than assuming one year will persist.
Risk factors that differ between the companies
Costco-specific considerations
- Membership dependence: profitability depends on member growth, loyalty, brand trust and renewal rates.
- Geographic concentration: the United States and Canada generated 86% of net sales and 83% of operating income in FY2026.
- Competition and price investment: maintaining a compelling value proposition can limit merchandise margins.
- Technology and supply-chain spending: investments may not produce the anticipated returns.
- International execution: newer markets may have lower renewal rates or different online-membership mixes.
Walmart-specific considerations
- Inflation and recession: changes in household budgets can alter product mix, traffic and margins.
- Tariffs and supply chains: trade policy, freight disruption and supplier costs can affect prices and profitability.
- Geopolitical and international exposure: results depend on conditions across multiple countries and currencies.
- Labor and operating costs: a large store, club and fulfillment network requires sustained investment.
- Execution complexity: integrating stores, pickup, delivery, marketplace and advertising creates more moving parts to manage.
Neither strong Costco renewal rates nor Walmart’s greater revenue scale removes these risks. Read the risk-factor sections of Costco’s FY2026 filing and Walmart’s FY2026 filing before making assumptions about durability.
Which investor profile fits each model?
Costco may fit an investor who values
- A concentrated membership model with recurring fee revenue.
- High renewal rates and a customer relationship tied to annual membership.
- Warehouse growth and sales volume supported by a limited assortment.
- Willingness to accept lower merchandise margins in exchange for turnover and loyalty.
Walmart may fit an investor who values
- Greater sales scale and a diversified three-segment structure.
- Grocery traffic and a broad omnichannel network.
- Exposure to international retail, Sam’s Club, marketplace and advertising activities.
- A business where modest operating margins are paired with very large dollar profits.
These are characteristics to test against your objectives, risk tolerance, time horizon and portfolio diversification—not personalized buy or sell recommendations.
A practical Costco-versus-Walmart checklist
- Write down the fiscal year-end for every figure you use.
- Download both latest annual reports and identify segment definitions.
- Build a five-year sheet for sales, comparable sales, operating income, operating margin, operating cash flow and capital expenditures.
- Add Costco’s membership-fee revenue, member count and renewal rates.
- Add Walmart’s segment sales, segment operating income and Walmart U.S. e-commerce sales.
- Record same-date share price, market capitalization, trailing and forward earnings multiples and dividend yield for both companies.
- Explain every major year-over-year change using management’s disclosed drivers, while distinguishing company statements from your own interpretation.
- Stress-test risks: slower membership renewals for Costco; weaker discretionary demand, tariffs, labor costs or international volatility for Walmart.
- Decide what evidence would invalidate your thesis and monitor those indicators after purchase.
Common comparison mistakes
- Using revenue as a valuation proxy: Walmart’s $706.413 billion net sales exceed Costco’s $297.247 billion, but sales scale does not reveal profitability, cash generation or the price investors pay.
- Mixing fiscal periods: Costco’s August year-end and Walmart’s January year-end describe different market conditions.
- Treating digital metrics as equivalent: Walmart’s approximately $99.6 billion Walmart U.S. e-commerce sales and Costco’s 21% digitally enabled comparable-sales growth use different bases.
- Comparing unmatched P/E ratios: both the price date and earnings definition must match.
- Ignoring segment mix: Walmart’s consolidated margin combines three major businesses; Costco’s economics are more concentrated in warehouses and memberships.
- Assuming a high renewal rate removes risk: membership economics remain exposed to competition, price perception, geography and execution.
Bottom line
Compare Costco and Walmart as different operating systems before comparing their tickers. Costco offers membership-fee economics, high reported renewal rates and a warehouse model concentrated in the United States and Canada. Walmart offers much greater sales scale, three operating segments and an extensive omnichannel network. The latest filings show strong but non-comparable digital and sales indicators, and the fiscal years do not align.
The disciplined conclusion is conditional: gather same-date COST and WMT prices, earnings and cash-flow data; analyze each company against its own growth and risk profile; then decide whether the market price adequately compensates you for those expectations. The available Walmart-only October 12, 2026 valuation snapshot is not enough to declare either stock cheaper or superior.
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