Costco Wholesale Corp. (NASDAQ:COST)

The United States operations exhibit a sustained trajectory of growth in both top-line revenue and operating income over the analyzed six-year period. The simultaneous increase in these metrics indicates a scalable business model capable of maintaining profitability while expanding its volume of operations.

Revenue Expansion

Total revenue increased consistently from 141,398 million US dollars in 2021 to 219,823 million US dollars by 2026. This steady growth reflects a robust increase in sales activity across the domestic market over the six-year horizon.

Operating Income Growth

Operating income grew from 4,262 million US dollars in 2021 to 7,647 million US dollars in 2026. The growth in operating income has outpaced the growth in total revenue, which is a primary driver for the expansion of the segment's profitability.

Segment Profit Margin Analysis

The segment profit margin shows an overall upward trend, rising from 3.01% in 2021 to 3.48% in 2026. A marginal decline to 3.05% was observed in 2023, followed by a period of consistent improvement from 2024 through 2026. This progression suggests an improvement in operational efficiency and a positive shift in the cost-to-revenue ratio.

The Canadian operations exhibit a consistent growth trajectory in both top-line revenue and bottom-line operating income over the six-year period ending August 30, 2026. This growth is characterized by a steady expansion of the scale of operations accompanied by improving operational efficiency.

Revenue Growth Trends

Total revenue demonstrates a continuous upward trend, rising from 27,298 million USD in 2021 to 40,561 million USD in 2026. This represents a substantial increase in market penetration and sales volume within the Canadian segment.

Operating Income Performance

Operating income grew consistently from 1,176 million USD in 2021 to 2,107 million USD in 2026. The growth in operating income outpaced the growth in revenue over the long term, suggesting an improvement in the cost structure and operational leverage.

Segment Profit Margin Evolution

The segment profit margin remained relatively stable between 2021 and 2023, fluctuating between 4.25% and 4.38%. However, a notable acceleration in margin expansion occurred starting in 2024, with the margin rising to 4.73% in 2024, 5.01% in 2025, and reaching 5.19% by 2026. This trend indicates a strengthening of profitability relative to sales, potentially driven by improved pricing strategies or optimized operating expenses.

The Other International Operations segment exhibits a period of initial margin compression followed by a sustained recovery in profitability. While total revenue demonstrated consistent year-over-year growth throughout the analyzed period, operating income experienced a temporary decline before entering a phase of accelerated expansion.

Revenue and Operating Income Trends

Total revenue increased steadily from 27,233 million US$ in 2021 to 42,770 million US$ by 2026. Operating income followed a non-linear path, dipping from 1,270 million US$ in 2021 to 1,179 million US$ in 2022, before climbing consistently to reach 1,931 million US$ by 2026.

Segment Profit Margin Volatility

A downward trend in the profit margin is observed between 2021 and 2023, where the ratio fell from 4.66% to a low of 3.91%. This indicates that the initial growth in revenue was offset by higher operating expenses. A subsequent reversal occurred starting in 2024, with the margin expanding sequentially to 4.01%, 4.33%, and 4.51% by 2026.

Operational Efficiency and Scaling

The recovery in profit margins from 2024 through 2026 suggests an improvement in operational efficiency or the achievement of economies of scale within international markets. The convergence of the 2026 margin toward the 2021 peak indicates a successful stabilization of costs relative to the expanded revenue base.

The United States operations demonstrate a consistent expansion in absolute profitability and asset base from 2021 through 2026. Operating income grew steadily each year, increasing from $4,262 million in 2021 to $7,647 million by 2026, representing a sustained increase in earnings power over the period.

Asset Utilization and Growth

Total assets followed a general upward trajectory, rising from $39,589 million in 2021 to $65,090 million by 2026. A notable deviation occurred in 2024, where assets slightly decreased to $48,816 million from the previous year's $49,189 million. This brief contraction in the asset base, occurring alongside rising operating income, resulted in a temporary surge in asset efficiency.

Segment Return on Assets (ROA) Trends

The segment ROA exhibited volatility, fluctuating between a low of 10.77% and a peak of 12.74%. An initial increase was observed in 2022, followed by a decline to 10.96% in 2023 as asset growth temporarily outpaced income growth. The ratio reached its maximum in 2024 at 12.74%, driven by the convergence of increased operating income and a reduced asset base. In the subsequent two years, the ROA trended downward to 11.75% by 2026, as substantial asset expansion—specifically the jump to $65,090 million—outstripped the growth rate of operating income.

The Canadian operations demonstrate a consistent upward trajectory in both profitability and asset efficiency over the analyzed period. There is a clear correlation between the steady increase in operating income and the improvement in the segment's return on assets.

Operating Income Growth

Operating income has maintained an uninterrupted growth trend, increasing from US$ 1,176 million in 2021 to US$ 2,107 million by 2026. This progression indicates a robust and scalable increase in the segment's earnings capacity.

Asset Base Trends

Total assets rose from US$ 5,962 million in 2021 to US$ 8,026 million in 2026. A marginal contraction was observed in 2023, with assets dipping to US$ 6,420 million from the previous year's US$ 6,558 million; however, this was followed by an accelerated expansion in subsequent years.

Segment ROA Performance

The Return on Assets (ROA) has improved every year, climbing from 19.72% in 2021 to 26.25% in 2026. Because the growth in operating income has consistently outpaced the growth in total assets, the segment has achieved higher capital efficiency and increased productivity per dollar of assets employed.

The Other International Operations segment exhibits a sustained trajectory of improvement in both absolute profitability and asset efficiency from 2021 through 2026. Following a brief period of contraction in 2022, the segment entered a phase of consistent expansion characterized by accelerating returns on invested capital.

Operating Income Performance

Operating income experienced a temporary decline in 2022, falling to 1,179 million US$ from 1,270 million US$ in 2021. This was followed by a recovery in 2023 and a period of rapid growth thereafter. By August 2026, operating income reached 1,931 million US$, reflecting a substantial increase in the segment's ability to generate profit from its international activities.

Asset Base Dynamics

Total assets mirrored the initial dip observed in income, decreasing to 12,704 million US$ in 2022. From 2023 onward, the asset base grew steadily, reaching 15,929 million US$ by 2026. The growth in assets appears disciplined, as the increase in operating income consistently outpaced the growth in the asset base during the latter half of the period.

Segment Return on Assets (ROA) Analysis

The Segment ROA demonstrates a continuous upward trend, rising from 9.26% in 2021 to 12.12% in 2026. Notably, the rate of improvement accelerated after 2023, with the ROA increasing by approximately 100 basis points per year between 2024 and 2026. This progression indicates significant gains in operational efficiency and suggests that the segment is leveraging its asset base more effectively to drive earnings growth.

The United States operations demonstrate a consistent upward trajectory in revenue generation alongside a general expansion of the asset base over the six-year period. Total revenue grew steadily from 141,398 million USD in 2021 to 219,823 million USD by 2026, reflecting sustained top-line growth.

Revenue and Asset Growth Trends

Total revenue increased across every reporting period, showing an overall growth of approximately 55% from 2021 to 2026. Total assets followed a similar growth pattern, rising from 39,589 million USD to 65,090 million USD, although a marginal contraction was observed in 2024, where assets decreased from 49,189 million USD to 48,816 million USD.

Segment Asset Turnover Performance

The asset turnover ratio remained relatively stable between 3.38 and 3.77, indicating a consistent ability to generate sales from the asset base. The ratio peaked in 2024 at 3.77, a result of increasing revenues occurring simultaneously with a slight reduction in total assets. This period represents the highest efficiency of asset utilization within the analyzed timeframe.

Analysis of Recent Declines

A downward trend in asset turnover is observed in the final two years, falling from 3.77 in 2024 to 3.38 in 2026. The sharpest decline occurred between 2025 and 2026, where the ratio dropped to its lowest point in the series. This decline is attributed to the asset base growing at a faster rate than revenue during the final year, with assets increasing by approximately 18.7% while revenue grew by approximately 9.9%.

Overall, while revenue and assets have both scaled significantly, the efficiency of asset utilization has experienced volatility. The current trend suggests a period of heavy asset investment that has not yet been matched by a proportional increase in revenue generation.

The Canadian operations demonstrate a consistent expansion in scale and a general improvement in asset efficiency from August 2021 through August 2026. Revenue growth has outpaced asset accumulation over the analyzed period, resulting in an enhanced capacity to generate sales from the employed asset base.

Total Revenue Trends

Revenue exhibits a steady upward trajectory, increasing from US$ 27,298 million in 2021 to US$ 40,561 million by 2026. This represents consistent year-over-year growth, indicating a sustained increase in operational scale and market penetration within the Canadian segment.

Asset Base Evolution

Total assets grew from US$ 5,962 million in 2021 to US$ 8,026 million in 2026. A minor deviation from the growth trend occurred in 2023, when assets decreased to US$ 6,420 million from US$ 6,558 million in the prior year, suggesting a temporary phase of asset optimization or depreciation that exceeded new capital expenditures.

Segment Asset Turnover Analysis

The asset turnover ratio improved from 4.58 in 2021 to a peak of 5.15 in 2023, signaling an increase in operational efficiency. Following this peak, the ratio stabilized, remaining between 5.04 and 5.06 from 2024 through 2026. This stabilization indicates that the segment has reached a mature efficiency level where revenue growth is now scaling proportionally with the growth of the asset base.

The Other International Operations segment demonstrates a consistent trajectory of revenue growth and improving asset utilization efficiency over the six-year period ending August 30, 2026.

Revenue Performance

Total revenue exhibits a steady and uninterrupted upward trend, increasing from $27,233 million in August 2021 to $42,770 million by August 2026. This progression indicates sustained expansion of the segment's market reach and sales volume.

Asset Base Evolution

Total assets experienced a slight contraction between August 2021 and August 2022, falling from $13,717 million to $12,704 million. From 2022 onward, a period of consistent growth followed, with the asset base expanding annually to reach $15,929 million by the end of the analysis period.

Asset Turnover Efficiency

The segment asset turnover ratio shows a continuous increase, rising from 1.99 in 2021 to 2.69 in 2026. The most pronounced improvement occurred between 2021 and 2022, where the ratio grew from 1.99 to 2.36. The subsequent steady climb suggests that revenue growth has consistently outpaced the rate of asset investment, resulting in higher productivity per unit of asset employed.

The analysis indicates a strong correlation between the expanding revenue stream and enhanced operational efficiency. The segment has successfully scaled its operations while optimizing its asset base, leading to a significant improvement in overall asset productivity.

The United States operations exhibit a consistent and accelerating trajectory of capital investment relative to the depreciation of existing assets. Both additions to property and equipment and depreciation and amortization expenses show steady year-over-year growth, with capital expenditures increasing at a faster rate than depreciation.

Capital Investment Trends

Additions to property and equipment demonstrate a strong upward trend, rising from 2,612 million US dollars in August 2021 to 5,122 million US dollars by August 2026. This represents a substantial increase in the allocation of capital toward the expansion or modernization of the physical asset base within the US segment.

Depreciation and Amortization Growth

Depreciation and amortization expenses increased steadily from 1,339 million US dollars in August 2021 to 2,082 million US dollars in August 2026. This growth is consistent with an expanding asset base, as new capital investments enter the depreciation cycle over time.

Capital Expenditures to Depreciation Ratio

The ratio of capital expenditures to depreciation serves as a key indicator of investment intensity. The ratio remained stable at 1.95 during the 2021 and 2022 periods before entering a phase of continuous growth, reaching 2.46 by August 2026. A ratio consistently above 1.0 indicates that the company is investing more in new assets than it is losing to depreciation, suggesting a strategy of aggressive growth and capacity expansion. The widening gap between investment and depreciation indicates that the rate of expansion is accelerating relative to the replacement of existing infrastructure.

The financial trajectory for Canadian operations indicates a significant shift from a maintenance-oriented investment phase to an aggressive expansionary posture. While depreciation expenses have grown at a steady, linear pace, capital expenditures have increased substantially, particularly in the latter part of the analyzed period.

Capital Expenditure Trends

Additions to property and equipment exhibited volatility between 2021 and 2023, fluctuating from US$272 million to a peak of US$388 million before retreating to US$281 million. However, a sharp upward trend is observed starting in 2024, with expenditures rising to US$351 million and accelerating to US$580 million in 2025 and US$673 million by 2026. This represents a significant increase in asset acquisition and infrastructure investment.

Depreciation and Amortization Stability

Depreciation and amortization costs have demonstrated consistent and modest growth, rising from US$177 million in 2021 to US$219 million in 2026. The stability of this metric suggests a predictable aging of the existing asset base, contrasting with the more erratic and then surging nature of new capital additions.

Segment Capital Expenditures to Depreciation Ratio

The ratio of capital expenditures to depreciation serves as a primary indicator of growth. The ratio fluctuated between 1.54 and 2.16 from 2021 through 2024, indicating that investments consistently exceeded the consumption of existing assets. A pronounced acceleration is observed in the final two years, with the ratio climbing to 2.96 in 2025 and reaching 3.07 in 2026. This trend confirms that the rate of new investment is now tripling the rate of depreciation, signaling a strategic priority toward capacity expansion and modernization within the Canadian market.

The financial trajectory of Other International Operations reveals a strategic transition from aggressive asset expansion toward a more sustainable maintenance and replacement phase. While capital expenditures consistently exceed depreciation and amortization, the narrowing gap between these two figures suggests a deceleration in the growth rate of the segment's physical infrastructure.

Capital Expenditure Patterns

Additions to property and equipment exhibited relative stability between 2021 and 2023, reaching a peak of US$ 754 million in 2023. Subsequently, expenditures fluctuated, declining to US$ 634 million in 2024 before a brief recovery in 2025 and a final decline to US$ 640 million in 2026. This volatility indicates a shift from consistent growth to more targeted or opportunistic investments.

Depreciation and Amortization Growth

A consistent upward trend is observed in depreciation and amortization, which rose steadily from US$ 265 million in 2021 to US$ 373 million in 2026. This linear increase reflects a growing base of accumulated depreciable assets, stemming from previous investment cycles, and underscores the increasing cost of maintaining the existing asset portfolio.

Capital Expenditures to Depreciation Ratio

The segment capital expenditures to depreciation ratio demonstrates a general downward trajectory, falling from 2.66 in 2021 to 1.72 in 2026. Although the ratio remains above 1.0—confirming that the segment is still investing more than is required to replace worn-out assets—the decline suggests that the pace of new capacity additions is slowing relative to the aging of the current asset base.