Why did Buffett's favorite stock Costco not rise as much as Walmart?

Costco announced its Q1 results for the fiscal year ending November 24, 2024:

Sales increased by 7.5% year-on-year to $60.99 billion;

Net profit increased by 13% year-on-year to $1.8 billion;

Comparable store sales increased by 5.2% year-on-year, with foot traffic up 5.1% and average prices rising by 0.1%.

Gross margin increased by 0.24 percentage points year-on-year to 11.28%.

As of Thursday's close, Costco's stock price fell slightly by 0.6%, but it has risen over 50% year-to-date, leading the S&P consumer staples sector alongside the similarly strong-performing Walmart, significantly outperforming the broader market this year.

From Costco's historical performance, its growth can traverse economic cycles, showing a trend of steady growth.

Compared to Walmart, Costco has higher sales per square foot, stable membership income, higher turnover efficiency, and excellent cost control capabilities.

Under high inflation, Walmart has become the choice for consumers seeking "value for money," while Costco is still supported by its core middle-class families.

Although Costco's performance remains robust, its stock price performance this year has lagged behind Walmart.

In terms of revenue, Costco and Walmart's growth has been roughly on par this year.

However, in terms of valuation, Walmart's valuation has risen from 26 times at the beginning of the year to 38 times, an increase of 46%, while Costco's valuation has risen from 45 times to 58 times, an increase of 29%.

This means that Walmart's stronger rise this year is more reliant on valuation expansion.

Even after a round of increases, Costco's current PE is still about 50% higher than Walmart's, showing a significant valuation premium in the retail industry, and this valuation is even higher than luxury giant LVMH (23 times), comparable to Hermes