Strong Sell COST by Aug 12, 2026.

Costco trades at \~42x forward earnings, priced for perfection in a softening macro environment. My bearish tilt into earnings rests on three quantitative flags: First, gross margin compression. Despite net sales growth, core merchandise margins have contracted sequentially for three quarters. SG&A leverage has masked this, but inflationary stickiness in labor and logistics is real. The high margin ancillary revenue stream aka membership fees faces comp headwinds. With retail sales data showing durable goods deflation and big ticket pullback, average …