Will Costco's trailing P/E ratio compress below 45x at any point before December 31, 2026?

P/E at 54x needs a 17% decline to hit 45x. Organic EPS growth of ~10% would bring trailing P/E to ~49x by end of 2026 -- insufficient without price decline. The Black Swan Beacon's 15-25% 'Perfection Trap' probability is directly relevant but requires a catalyst that doesn't yet exist. The 'any point' framing extends the window to 10 months, but with NO bearish thesis, NO short sellers, and operations EXCEEDING expectations, the base case is continued premium. A brief dip to 45x requires either a significant macro drawdown or a company-specific miss -- both possible but not probable.

The question is broader than the 'Perfection Trap' scenario -- ANY reason P/E drops below 45x resolves YES, including macro drawdowns, sector rotation, or tariff escalation. Over a 10-month window, various exogenous events could trigger temporary compression. However, Costco has historically been resilient to market drawdowns -- its P/E EXPANDED during recent volatility. The 3-year average of 49x and 5-year average of 44.67x indicate 45x is at the boundary of recent historical range but below the post-2023 regime. The market would need to briefly reverse the 'compounder' reclassification that drove the premium from ~45x to ~54x.

Quantitative framing: Current implied price ~$983 (54x * $18.21 EPS). For P/E < 45x with FY2026 EPS ~$20-21 (10-15% growth), price would need to fall below ~$945 (if EPS at $21) to ~$819 (if EPS stays at $18.21). With 10% EPS growth to ~$20, need stock below $900 -- a ~8-9% decline from current. With organic EPS growth reducing the hurdle, a 10%+ market correction (historically common in ~50-60% of calendar years) could temporarily push P/E below 45x if Costco participates proportionally. But Costco's defensive characteristics mean it typically declines less than the market. The 2022 analog saw COST P/E briefly touch ~32x, but from a lower starting base of ~42x.

54x to 45x is a significant move for a stock with this operational momentum. The committee found NO bearish thesis, NO short interest, and operations EXCEEDING expectations. The 'Perfection Trap' requires a specific catalyst that doesn't exist yet. Over 10 months, organic EPS growth pulls P/E down naturally to maybe 48-50x but not 45x without meaningful price decline. Consumer staples don't typically see 17% drawdowns in non-recessionary environments. Recession probability adding ~15-20% and company-specific miss adding ~5-10% gives a combined estimate of ~25%.

The 5-year average P/E of 44.67x is essentially AT the 45x threshold, meaning 45x is not extreme for Costco -- it's where the stock traded at various points in the last 5 years. The question is whether the recent premium (49-54x over 3 years) persists ALL year without any temporary reversion. The 'any point' framing only requires a brief touch of 45x. Market corrections of 10%+ occur in most years, and if EPS grows 10% organically, the price decline needed drops to ~8-9%. A combination of organic EPS growth and even a moderate correction during the year could temporarily bring P/E to 45x. This run weights the probability slightly higher because of the extended 10-month window and the 'any point' resolution criterion.

The committee's finding that multiple sustainability is the weakest link is significant but doesn't imply imminent break. Current execution is EXCEEDING and the moat is DEFENSIBLE. Healthcare cost headwinds and membership fee normalization are FY2027-28 concerns, not 2026. For 2026 specifically, the path to 45x requires an exogenous macro shock rather than company-specific deterioration. Estimating ~20% probability of a macro event severe enough to temporarily push COST below 45x, plus ~10% probability of a company-specific operational miss triggering reclassification narrative, with overlap reducing the combined figure to ~27%.

Current P/E 54x needs 17% drop to 45x. Black Swan Beacon cites 15-25% Perfection Trap probability over an unspecified timeframe -- within just 10 months, with no catalyst today and EXCEEDING execution, this is on the lower end. Strong defensive characteristics reduce drawdown participation. Lean toward unlikely.

5-year average P/E at 44.67x confirms 45x is familiar territory. 'Any point' in 10 months is a wide window. Market drawdowns of 10%+ are common historically. With organic EPS growth reducing the needed price decline, a moderate market correction could temporarily push COST to 45x. But COST's premium and defensive nature provide a buffer.

Base rate: ~50% of calendar years see 10%+ broad market drawdowns. From 54x with 10% EPS growth, COST needs ~8-9% price decline to hit 45x. Historical frequency of 8-9%+ drawdowns for large-cap defensive consumer staples is probably 25-30% in a given year. Over 10 months (not full year), slightly lower. Rounding to 28%.