Thursday will likely be a big day for Wal-Mart Stores (NYSE:WMT), the world's largest retailer with a market capitalization of more than $255.3 billion and 2012 sales of roughly $469.2 billion, as it reports its earnings for the third quarter of 2013. In comparison, Target (NYSE:TGT), one of Wal-Mart's biggest competitors, has a market capitalization of $41.3 billion and 2012 sales of $73.3 billion, while Costco Wholesale Corporation (NASDAQ:COST) sits in the middle with a market capitalization of $53.5 billion and 2012 revenue of almost $105.2 billion. All three retailers will be watched closely going into the holiday season by investors for indications of how the last quarter of the year will treat these mega-retailers. Tomorrow might just be the most important day of them all. 

Earnings expectations
For the quarter, the consensus between analysts is that Wal-Mart will post earnings per share of $1.13 on revenue of $116.79 billion. If this expectation comes to fruition, then it would market a 4.6% increase in the company's earnings per share of $1.08 from the same quarter a year ago. Furthermore, it would imply that revenue for the industry behemoth has risen by 2.5% from the $113.93 billion the company reported this time last year.

On a year-over-year basis, matching earnings would imply that the company has seen its nine-month earnings per share rise by 4.8% from $3.35 in the first three quarters of last year to $3.51 this year. This would imply revenue of $347.9 billion, a 2% increase from the $341.2 billion it clocked in during the same period last year. If this quarter is anything like last quarter, the disparity between earnings per share will likely be attributable to a small improvement in the company's cost of goods sold as a percentage of revenue, combined with few common shares outstanding.

How does Wal-Mart stack up against its peers?
While analyzing a company's performance year-to-date is nice, it is more important to understand how the company has performed over an extended period of time, especially compared to its peers. In an attempt to assess this, I decided to pit the company up against Target and Costco.

From a revenue perspective, Wal-Mart has performed in the middle of the pack. Over the past five years, the company saw its revenue rise by 16%. In comparison, Target was only capable of increasing its revenue by 12.9%. Although both of these growth rates are acceptable, they pale in comparison to the 47.2% growth rate experienced by Costco.

Looking now toward net income, we see a similar, but slightly different story. While Costco saw its net income rise by an astonishing 87.8%, placing it in first place again, it was Target that earned second place with a growth rate of 35.5%. In contrast, Wal-Mart came in third place with a 26.9% improvement in its net income; still good but leaving investors to question if Target or, very possibly, Costco, might eventually knock Wal-Mart out of the number one spot eventually.

A new threat appears
In addition to competition coming in from Target and Costco, Wal-Mart is also being threatened by a company that no one would have guessed a few years ago. The culprit? None other than Best Buy (NYSE:BBY), an electronics retailer with a market capitalization of $15 billion.

Shares for the specialty retailer are up 292.8% from their 52-week low as the company has successfully turned its once faltering business around to at least some degree. Although revenue for the company had continued to decline year-to-date, it has been able to return from losses to profitability once again due to its ability to control costs.

Now, admittedly, the company is far smaller than Wal-Mart and its focus is in electronics while Wal-Mart focuses on... well... everything, but a new advertisement for the company recently released challenges the assertion that Wal-Mart is the true place to buy things on the cheap. In addition to cutting $200 off the purchase price of a variety of Hewlett-Packard laptops (and beating at least one model by a penny), it's giving significant discounts on Apple products, such as $1,099.99 for the regularly priced $1,299.99 MacBook Pro with retina display.

What this means for Best Buy is that it will likely garner some significant traffic this holiday season, but this traffic will come at the cost of lower margins. The downside to this is lower profitability in the short-term, but it offers a higher chance for customers to become enchanted by the Best Buy name, which could help in the long run.

Foolish takeaway
Undoubtedly, Wal-Mart is the big fish in the retail industry. However, just because of this, we cannot assume that this will always hold true. Target is catching up in terms of profitability, whereas Costco has rapidly expanded and is beating the giant on both its top line and bottom line in terms of year over year growth. Furthermore, Best Buy, though still small, should serve as a warning that size isn't everything in retail and that, in time, a smaller retailer may have ample opportunity to catch up to and steal market power from, a company as big as Wal-Mart in at least one of its segments.

As far as earnings go, I don't believe it's out of the question to expect big things from the power player that is Wal-Mart in the short term. But, investors should remain only cautiously optimistic in the company's future prospects, because it appears as though multiple competitors are beginning to close in.

Daniel Jones has no position in any stocks mentioned. The Motley Fool recommends Costco Wholesale. The Motley Fool owns shares of Costco Wholesale. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.