Is Costco Wholesale Corp. overvalued or undervalued?

As of 30 June 2025, Costco Wholesale Corp. has moved from a fair to an expensive valuation grade. The company is currently overvalued, as indicated by its high P/E ratio of 57, a Price to Book Value of 16.59, and an EV to EBITDA of 35.46. In comparison, Walmart, Inc. has a P/E of 39.50 and an EV to EBITDA of 20.06, while O'Reilly Automotive, Inc. shows a P/E of 37.33, highlighting that Costco's valuation metrics are significantly higher than its peers.
Despite a strong return over the long term, with a 5-year return of 183.47% compared to the S&P 500's 96.61%, Costco's recent performance has lagged behind the index, with a 1-year return of 6.70% versus 17.14% for the S&P 500. This underperformance, combined with its elevated valuation ratios, supports the conclusion that Costco is overvalued at its current price.