Despite Costco ‘s “lumpy” year, Jim Cramer urges investors to stay the course with one of the world’s greatest retailers. “If you really want to go against Costco, again, another notice of your funeral,” Jim said Friday on “Squawk on the Street.” His pointed comments came a day after Costco reported a strong first quarter of fiscal 2026, after the bell on Thursday. The retailer delivered a top- and bottom-line beat, driven by membership fee growth, higher net sales, and healthy profits. Yet shares fell roughly 0.8% on Friday, indicating the upbeat report wasn’t enough to move the needle for investors. The key pain point was a dip in membership renewal rates, signaling a slight slowdown. The reason for the pullback is apparent: The quarter “has to be perfect with that multiple,” Jim explained, referring to Costco’s historically premium price-to-earnings multiple, which is currently about 43. “What happens is if you’re perfect, and then you’re not as perfect, people want to sell,” Jim explained. Costco has a powerful, long-standing membership-fee model that has delivered predictable, high-margin profits. Members continue to resonate with Costco’s value proposition of bulk buying at discounted prices, enabling Costco to perform well in both good and uncertain economic conditions. But signs of a consumer pullback have been evident recently. Costco’s U.S. sales for the November period increased 5.8% excluding gas and currency fluctuations, reflecting a significant deceleration from the 6.4% growth in October. While the company’s business remains strong, investors are struggling to reconcile the stock’s high valuation and market performance with its “just OK” stretch of quarterly results this year — especially as competitor Walmart has excelled. The country’s largest U.S. retailer has emerged as the stronger performer in 2025. That has translated into stronger stock gains as well. Walmart stock is up 27% year-to-date, while Costco shares are down about 3.6% over the same period. “This is the year that Walmart excelled and deserved the premium multiple, and this is the year where Costco just delivered ok,” Cramer said. Still, he added, Costco’s underlying business is good, and the stock continues to have “a lot of upside.” “We own it, we’ve owned it forever, we’re going to continue to own it,” Jim said. (Jim Cramer’s Charitable Trust is long COST. See here for a full list of the stocks.)
