Costco Wholesale Corp. (NASDAQ:COST)

The profitability ratios demonstrate generally positive trends over the analyzed period, with some fluctuations. Gross profit margin, operating profit margin, and net profit margin all exhibited an overall upward trajectory, though not consistently. Return on equity (ROE) showed more volatility, while return on assets (ROA) displayed a clear and sustained increase.

Gross Profit Margin

The gross profit margin experienced a slight decline from 11.32% in November 2020 to a low of 10.39% in November 2022. However, it subsequently recovered and increased steadily, reaching 11.17% in November 2025, and peaking at 11.12% in February 2026. The most recent value, in May 2025, is 11.09%, indicating a return to levels seen earlier in the period.

Operating Profit Margin

The operating profit margin showed a relatively stable pattern between November 2020 (3.43%) and August 2022 (3.50%). A noticeable increase began in November 2022, culminating in a peak of 3.90% in November 2025. The margin then decreased slightly to 3.85% in February 2026. The latest reading, in May 2025, is 3.82%.

Net Profit Margin

Similar to the operating profit margin, the net profit margin remained relatively consistent in the initial period, fluctuating between 2.48% and 2.67% through February 2022. A clear upward trend emerged from May 2022, with the margin reaching 3.05% in November 2025. A slight decrease to 3.00% was observed in February 2026, with the most recent value in May 2025 being 2.97%.

Return on Equity (ROE)

ROE exhibited the most significant fluctuations. It decreased from 29.10% in November 2020 to 25.11% in May 2023, before experiencing a substantial rebound. The ratio peaked at 32.95% in May 2024, then decreased to 27.77% in February 2026. This suggests a greater sensitivity to changes in equity or net income compared to the other ratios.

Return on Assets (ROA)

ROA demonstrated a consistent and positive trend throughout the analyzed period. Starting at 7.18% in November 2020, it steadily increased to 10.22% in February 2026. This indicates an improving efficiency in utilizing assets to generate profits. The latest value, in May 2025, is 10.50%.

Overall, the company’s profitability appears to be strengthening, as evidenced by the increasing trends in gross, operating, and net profit margins, as well as ROA. While ROE experienced volatility, its recent performance remains relatively strong. The consistent improvement in ROA suggests effective asset management contributing to enhanced profitability.

The gross profit margin exhibited a generally stable pattern over the analyzed period, with some discernible fluctuations. Initially, the margin remained relatively consistent, fluctuating between 11.13% and 11.32% from November 2020 to August 2021. A gradual decline was then observed through May 2022, reaching a low of 10.71%. Subsequently, the margin experienced a period of recovery, peaking at 11.17% in February 2026, with intermittent increases and decreases throughout the period.

Initial Stability (Nov 2020 - Aug 2021)

During this timeframe, the gross profit margin demonstrated minimal variation, consistently remaining above 11%. This suggests a stable relationship between the cost of goods sold and net sales revenue during this period. The slight fluctuations likely reflect normal seasonal variations or minor changes in product mix.

Downward Trend (May 2022)

A noticeable decrease in the gross profit margin occurred, falling to 10.71% in May 2022. This decline could be attributed to increased costs of goods sold, potentially due to inflationary pressures or supply chain disruptions, without a corresponding increase in sales prices. Further investigation into cost components would be necessary to pinpoint the exact cause.

Recovery and Fluctuations (Aug 2022 - Feb 2026)

Following the low in May 2022, the gross profit margin showed a recovery, reaching peaks in August 2022 (10.48%) and again in February 2026 (11.17%). However, this recovery was not linear, with several intermediate declines. These fluctuations suggest a dynamic pricing environment or varying cost structures impacting profitability. The margin reached its highest point in the analyzed period in February 2026.

Overall Trend

Despite the fluctuations, the gross profit margin generally remained within a narrow range of approximately 10.39% to 11.32% throughout the entire period. This indicates a consistent underlying profitability, although subject to external factors influencing costs and pricing. The most recent values suggest a slight upward trend towards the end of the observation period.

The gross margin in US$ millions generally increased over the period, although not consistently. The largest increases were observed between May 2021 and August 2021, and again between May 2024 and September 2024. Net sales also increased substantially over the period, indicating overall business growth. The relationship between the growth in gross margin and net sales should be further investigated to determine the drivers of profitability.

The operating profit margin exhibited a generally stable pattern over the analyzed period, with fluctuations occurring primarily in response to shifts in operating income and net sales. An initial period of relative consistency from November 2020 through May 2022 is followed by a period of increased variability, culminating in a clear upward trend in the most recent quarters.

Initial Stability (Nov 2020 – May 2022)

From November 2020 to May 2022, the operating profit margin remained within a narrow range of 3.36% to 3.61%. While some quarterly variation existed, the metric demonstrated overall resilience, suggesting a consistent ability to translate sales into operating profit during this timeframe. The slight increase in February 2022, followed by a minor decrease in May 2022, indicates short-term fluctuations but does not signal a significant shift in underlying profitability.

Increased Volatility & Upward Trend (Aug 2022 – May 2025)

Beginning in August 2022, the operating profit margin experienced greater volatility. A decrease to 3.50% was observed in August 2022, followed by a dip to 3.45% and 3.39% in the subsequent two quarters. However, a notable upward trend commenced in May 2023, accelerating through the remainder of the period. The margin increased from 3.41% in May 2023 to 3.90% in February 2026, representing a substantial improvement in profitability. This increase correlates with a period of strong growth in both operating income and net sales.

Recent Performance (Nov 2024 – Feb 2026)

The most recent four quarters demonstrate a consistently high operating profit margin, ranging from 3.74% to 3.90%. This sustained performance suggests that the improvements observed in the prior period have solidified, and the company is effectively managing its costs relative to revenue. The margin reached its highest point in February 2026 at 3.90%, indicating a peak in operational efficiency.

Overall, the operating profit margin demonstrates a positive trajectory, particularly in the latter portion of the analyzed period. While earlier quarters exhibited stability, the recent trend indicates improving profitability and efficient operational management.

The net profit margin exhibited a generally increasing trend over the observed period, spanning from November 2020 to May 2025, with some quarterly fluctuations. Initial values were in the 2.5% range, gradually rising to exceed 3.0% towards the end of the analyzed timeframe. A more detailed examination reveals periods of relative stability and acceleration in this metric.

Initial Period (Nov 2020 – Aug 2021)

The net profit margin began at 2.55% in November 2020, experienced a slight decrease to 2.48% in February 2021, and then demonstrated modest growth, reaching 2.61% by August 2021. This initial phase suggests a relatively consistent profitability level with minor variations.

Growth Phase (Nov 2021 – Sep 2023)

From November 2021 through September 2023, the net profit margin showed a more pronounced upward trajectory. It increased from 2.59% to 2.65%, then to 2.95% in September 2023. This period indicates improving profitability, potentially driven by operational efficiencies or increased pricing power.

Peak and Stabilization (Nov 2023 – May 2025)

The net profit margin peaked at 3.05% in May 2025. Prior to this, it reached 2.78% in November 2023, 2.88% in May 2024, and 2.98% in November 2024. The values remained consistently above 2.90% during this period, suggesting a sustained level of profitability. A slight increase to 3.00% was observed in May 2025, followed by a further increase to 3.02% and finally 3.05%.

The observed trend suggests a strengthening of the company’s ability to convert net sales into net income over time. While quarterly variations exist, the overall direction is positive. The most significant gains in net profit margin occurred between November 2021 and September 2023, indicating a period of substantial improvement in profitability. The stabilization at a higher margin in the later periods suggests successful implementation of strategies to maintain these gains.

The Return on Equity (ROE) for the analyzed period demonstrates a generally stable performance with some notable fluctuations. Initially, the ROE exhibited a slight decline from 29.10% in November 2020 to 27.75% in February 2021, followed by a recovery to 28.67% in May 2021. The ROE remained relatively consistent through August 2022, fluctuating within a narrow range between 28.28% and 28.51%. A subsequent downward trend commenced in November 2022, reaching a low of 25.46% in February 2023.

A significant increase in ROE was observed in May 2023, rising to 25.11%, and continuing to climb sharply to 32.73% in November 2023. This upward momentum continued into early 2024, peaking at 32.95% in February 2024. Following this peak, the ROE experienced a moderate decline through the remainder of 2024 and into the first half of 2025, settling at 27.77% in August 2025. The most recent periods show a slight recovery, with the ROE reaching 26.64% in November 2025, and continuing to 26.64% in February 2026.

Overall Trend

The ROE generally remained above 28% for much of the analyzed period, indicating a consistently strong return on shareholder investment. However, the latter portion of the period shows a clear downward trend, albeit from a high base, suggesting potential shifts in profitability or equity management.

Significant Fluctuations

The most substantial increase in ROE occurred between May 2023 and February 2024, potentially driven by a combination of increased net income and a temporary decrease in total stockholders’ equity. The subsequent decline from February 2024 through February 2026 suggests a normalization of these factors or the emergence of new influences.

Recent Performance

The most recent quarterly values indicate a stabilization of ROE around the 26-27% range. While lower than the peaks observed in late 2023 and early 2024, this level remains competitive and suggests continued profitability. Further monitoring is warranted to determine if this represents a new baseline or a temporary plateau.

Net Income and Equity Relationship

The ROE fluctuations closely mirror the trends in net income attributable to the company and total stockholders’ equity. Periods of increasing net income generally corresponded with higher ROE values, while changes in equity levels also influenced the ratio. The significant drop in equity in November 2023 likely contributed to the substantial ROE increase observed at that time.

The Return on Assets (ROA) for the analyzed period demonstrates a generally positive trajectory, with some fluctuations. Initially, the ROA exhibited an increase from 7.18% in November 2020 to a peak of 9.11% in August 2022. Following this peak, the ROA experienced a slight decline before resuming an upward trend, culminating in a value of 10.22% in May 2024. The most recent periods show a slight decrease to 10.03% in September 2024, and then a further decrease to 9.88% in February 2025, before increasing again to 10.18% in May 2025 and 10.32% in August 2025. The latest reported ROA is 10.13% in November 2025 and 10.16% in February 2026.

Initial Growth Phase (Nov 2020 – Aug 2022)

The ROA consistently increased over this period, indicating improving profitability relative to the asset base. This suggests effective asset utilization and/or enhanced net income generation. The increase from 7.18% to 9.11% represents a substantial improvement in the company’s ability to generate profit from its assets.

Mid-Period Fluctuation (Aug 2022 – May 2023)

A minor dip in ROA is observed following the peak in August 2022, followed by a recovery. This suggests a temporary disruption in profitability or asset efficiency, but the subsequent rebound indicates resilience. The ROA remained above 8.84% throughout this period, demonstrating continued strong performance.

Recent Strong Performance (May 2023 – Feb 2026)

The ROA experienced a significant increase, reaching 10.24% in November 2023 and peaking at 10.56% in May 2024. While there have been minor fluctuations in the most recent periods, the ROA has remained consistently above 10%, indicating sustained high levels of profitability and efficient asset management. The latest value of 10.16% in February 2026 remains strong.

Net Income and Total Assets Relationship

The ROA trend closely mirrors the trends in net income. Increases in net income generally correspond with increases in ROA, and vice versa. Total assets have also generally increased over the period, but the ROA increases suggest that net income growth has outpaced asset growth, leading to improved profitability.

Overall, the ROA demonstrates a positive trend, indicating effective management of assets and consistent profitability. The company has shown an ability to generate increasing returns from its asset base over the analyzed timeframe, with recent performance remaining robust despite minor fluctuations.