NEW YORK WHOLESALE

Costco Wholesale (Nasdaq: COST) announced its results for the most recent quarter on May 24, 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: 5 Tricks Companies Use During Earnings Season

The Numbers:

Costco Wholesale's EPS outpaced analyst estimates while the company's revenues came in below predictions. The company reported 88 cents per share versus the 87 cents per share estimate and revenues of $21.85 billion versus the $22.11 billion estimate. EPS rose 20.5% while revenue climbed 5.9% 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. The company's net income for the quarter rose 19.1% to $386 million. Last quarter marked the third in a row of rising net income.

A Look Back:

Last quarter was the fifth in a row that the company saw shrinking gross margins, as they fell 1.8 percentage points from the year-earlier quarter to 10.6%. In that span, margins have contracted an average of 0.7 percentage point per quarter on a year-over-year basis.

Net income has increased 10.3% year-over-year on average across the last five quarters. The biggest gain came in the most recent quarter, when income climbed 19.1% from the year-earlier quarter.

Looking Ahead:

For next quarter, analysts have a more positive outlook about the company's expected results. The average estimate for the fourth quarter is $1.29 per share, up from $1.28 90 days ago. Increasing earnings estimate is a positive sign about the company and it typically leads a increase in the stock price. For the fiscal year, the average estimate has moved down from $3.85 a share to $3.84 over the last 60 days.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)