Costco Wholesale's Fourth Quarter Earnings Report

By Investopedia Staff | October 10, 2012 AAA

Costco Wholesale (Nasdaq:COST) announced its results for the fourth quarter on October 10, 2012. Costco Wholesale operates membership warehouses that offer a selection of nationally branded and selected private-label products in categories such as food, appliances, and sporting goods, at low prices.

In most situations, when earnings do not meet analyst estimates, a business' stock price will tend to drop. On the other hand, when actual earnings beat estimates by a significant amount, the share price will likely surge. SEE: Surprising Earnings Results

The Numbers: Costco Wholesale beat expectations with its latest EPS and revenue figures. The company reported $1.39 per share versus the $1.29 per share estimate and revenues of $32.22 billion versus the $22.11 billion estimate. EPS rose 28.7% while revenue climbed 14.3% from the same period last year. Costco Wholesale's revenue has grown during each of the past four quarters on a year-over-year basis. For the fourth quarter, the company reported net income of $609 million, up 27.4% from the year-ago quarter. Last quarter marked the third in a row of rising net income.

A Look Back: Net income has increased 14.6% year-over-year on average across the last five quarters. The biggest gain came in the most recent quarter, when income climbed 27.4% from the year-earlier quarter.

Looking Ahead: Analysts appear increasingly optimistic about the company's results for the next quarter. The average estimate for the first quarter of the next fiscal year has moved up from 91 cents a share to 93 cents over the last 60 days. When analyst increase earnings estimates investors can assume business has been stronger than first thought and is an encouraging sign for investors. For the fiscal year, the average estimate has moved up from $3.84 a share to $3.86 over the last 60 days.

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