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Costco and PepsiCo occupy very different profitability profiles despite both showing multi-year revenue growth. Costco operates on razor-thin margins characteristic of warehouse retail: on FY2025 revenues of $275.2B [COST:Q3], it generated operating income of $10.4B [COST:Q11] and net income of $8.1B [COST:Q7], implying an operating margin of roughly 3.8% and a net margin of roughly 2.9%. Yet Costco's absolute earnings trajectory is strongly upward, with net income rising meaningfully from FY2022 levels through FY2025 [COST:Q7], reflecting disciplined cost management and the leverage of its membership model. PepsiCo, by contrast, benefits from a branded consumer-goods model with far richer margins: on FY2024 revenues of $91.9B [PEP:Q2] it posted gross profit of $50.1B [PEP:Q14] and operating income of $12.9B [PEP:Q10], implying a gross margin above 54% and an operating margin near 14%. However, PepsiCo's profitability has faced near-term headwinds in FY2025, with operating income declining to approximately $11.5B [PEP:Q11] and net income pulling back to approximately $8.2B [PEP:Q7] after stronger FY2024 results [PEP:Q6][PEP:Q10], suggesting cost or volume pressures are compressing earnings even as revenues edged higher. In absolute net income terms the two companies have converged—Costco at $8.1B [COST:Q7] versus PepsiCo at $8.2B [PEP:Q7] in FY2025—but PepsiCo achieves that on roughly one-third of Costco's revenue base, underscoring its structurally superior margin profile even amid near-term softness.
COST: Costco's profitability is defined by high-volume, low-margin warehouse retailing, yet its earnings power has compounded impressively: operating income grew from $7.8B in FY2022 [COST:Q8] to $10.4B in FY2025 [COST:Q11], and net income has risen consistently over the same span to $8.1B [COST:Q7]. Revenue growth of roughly 21% over four years [COST:Q0][COST:Q3] has translated into consistent bottom-line expansion, reflecting disciplined cost management and the leverage of its membership model.
PEP: PepsiCo commands structurally superior margins—gross profit of $50.9B on $93.9B of FY2025 revenues [PEP:Q15][PEP:Q3] implies a gross margin above 54%—but its profitability momentum has stalled. Operating income declined to approximately $11.5B [PEP:Q11] and net income fell to approximately $8.2B [PEP:Q7] in FY2025, retreating from stronger FY2024 levels [PEP:Q10][PEP:Q6]. The FY2025 pullback signals cost or volume pressures compressing earnings even as revenues edged modestly higher.