Costco Wholesale Corp. (COST) reported strong free cash flow and FCF margins on Dec. 11. Despite a year-over-year 8.7% stock decline, value investors see potential. COST closed at $873.35 on Dec. 26, 2025, down from $956.14 a year ago. Analysts project a 18% potential stock increase to $1,032.

Costco’s fiscal Q1 2026 revenue increased 8.28% YoY, with FCF up 58.4%. FCF margins improved 46% in Q1 2026 and 12.6% over FY 2025. Sales forecasts indicate a 10% increase YoY, projecting $10.68 billion FCF for the next 12 months, 36.3% higher than FY 2025.

Costco’s potential value based on FCF and dividends suggests a $1,038 price target. Analysts have an average $1,031.67 price target, indicating an 18% potential upside. The stock appears undervalued, attracting value investors. Stay tuned for leveraged investment strategies in upcoming articles.

Read more at Barchart: Costco Has Tumbled Despite Higher FCF and FCF Margins