Costco Wholesale Corporation

Taken together, the scores describe a company whose reported figures look internally consistent, while the narrative is harder to follow than the numbers. The Beneish M-Score is -2.772, which is below the -1.78 threshold and therefore not in the elevated manipulation-risk zone. This is a screening tool, so a result below the threshold is not proof that the figures are accurate, but it raises no flag. The Altman Z″-Score of 2.83 falls in the safe zone, which is 2.60 or above. The Piotroski F-Score is 8 of 8 computable signals, meaning all eight testable signals were positive. The Fog Index of 19.96 is in the very hard to read band, above 18, so the MD&A asks more patience of a casual reader than most filings. Operating cash flow of $15.82 billion was 1.71 times net income of $9.23 billion, which suggests reported profit is backed by cash. Total assets rose to $89.05 billion from $77.1 billion, long-term debt fell to $3.91 billion from $5.71 billion, and equity rose to $35.8 billion from $29.16 billion. The filing also names specific pressure points. The worldwide renewal rate was 89.8%, compared with 92.3% in the U.S. and Canada, and the risk text says international growth and online sign-ups renew at slightly lower rates. Gasoline was 11% of net sales across 774 gas stations, so fuel price swings move both sales and gross margin. Readers may want to look at the renewal disclosures and the tariff refund notes in Item 7 and Item 8 together.

Catalyst.Management attributes growth to comparable sales, defined as net sales from warehouses open more than one year, and to new openings. In 2026 Costco opened 28 warehouses, 25 net new, bringing its worldwide total to 939. Net sales rose 10% to $297,247 million, helped by higher gasoline prices (adding $3,501 million, or 130 basis points) and favorable currency moves ($1,332 million, or 49 basis points). Membership fee revenue rose 11% to $5,907 million, which the filing ties to new sign-ups, fee increases, and Executive upgrades. Paid members reached 84,100 thousand, up from 81,000 thousand a year earlier.

Hidden risk.The easiest item to miss is the IEEPA tariff refund. Costco paid roughly $500 million in tariffs and began receiving refunds in 2026: $184 million in total, of which $174 million reduced merchandise costs and $10 million was recorded as interest income. Another $155 million was received after year-end. Management says part of the refunds was passed to members as lower prices and the rest is intended for member value. Because the company recognizes these recoveries only as they are realized, they can shift reported margins between periods. Net margins are thin by design, so a one-time recovery of this size matters. The MD&A Fog Index of 19.96 falls in the very hard to read band, which means the explanation of these effects is dense for a casual reader.