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Research Alert: Cost: Solid Beat; Cash Balance Hits All-time High

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CFRA, an independent research provider, has providedwith the following research alert. Analysts at CFRA have summarized their opinion as follows:

COST delivered solid Q3 FY 26 (Aug.) results, with EPS of $4.93 (+15% Y/Y) beating consensus by a penny and net sales of $69.15B (+11.6% Y/Y). Comparable sales growth of 6.6% (ex-gas/FX) was due to balanced traffic (+2.4%) and ticket (+4.2%) gains across all segments. Digital sales continued to impress, with 20.8% growth, marking the third consecutive quarter of 20%+ expansion, while membership metrics remained healthy, with total paid members reaching 82.9M (+4.1% Y/Y) and renewal rates holding steady. Gross margin compressed 21 bps to 11.04% primarily due to gas impact, though underlying margins improved 1 bp excluding gas. With cash balances reaching a record $20.0B (+35% Y/Y), we believe COST may be positioned for another special dividend similar to the $15/share payment made two years ago (when the cash balance hit $18B). Executive member penetration continues driving 75% of total sales, supporting the membership model's value proposition.

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