Cost
Image: Costco.

Costco Wholesale (NASDAQ:COST) is in a class by itself in the retail world, with millions of devoted members flooding into its stores. Yet recently, some investors have been troubled by signs that Costco's past growth rates might be slowing, and coming into Tuesday night's release of its fiscal fourth-quarter financial report, fears of sluggish performance had held the stock back from the highs it posted earlier in the year. In its results, Costco gave some reassurance, and although revenue figures came in below expectations, the retailer more than made up for it on the bottom line. Let's look more closely at Costco to see how the company fared to finish its fiscal year and what it sees ahead.

Costco squeezes more margin from its sales
Costco continued its long streak of producing greater earnings gains than top-line growth. Fourth-quarter revenue came in at $35.78 billion, less than 1% higher than the year-ago quarter and about half a billion dollars shy of the consensus forecast among those following the stock. Yet Costco produced net income growth of 10%, posting profits of $767 million that equated to diluted earnings of $1.73 per share, $0.07 higher than what most investors were expecting to see from the big-box retailer.

As we've seen in past quarters, the drop in gasoline prices played a huge role in the top-line performance for Costco. When you look at comparable sales for the company on the whole, Costco posted a decline of 1% during the quarter, with big negative results in Canada and the rest of its international operations offsetting a 2% rise in U.S. comps. Yet when you factor in gasoline price deflation, U.S. comps rise to 6%, and between gasoline and foreign-exchange impacts, a swing of 13 to 17 percentage points in international results brings Costco's adjusted comps growth to 6%. For the full fiscal year, Costco fared even better, posting 7% growth in comparable sales.

Still, not all of the news was good for Costco. Membership fee revenue managed to gain slightly from the year-ago quarter, but the growth rate of just 2% continued the deceleration that we've seen all year. What saved Costco was its ability to keep its merchandise costs in check, with a rise of just a fraction of a percent being the biggest contributing factor to the retailer's rise in operating income.

What's next for the warehouse retailer?
As expected, Costco managed to jump-start the pace of its store-count expansion during the quarter, with a rise of 13 locations bringing its total network to 686 stores. Six of those locations are in the U.S., while three new stores opened in Japan, and Costco added one location each in Mexico, the U.K., Korea, and Taiwan. Costco expects that pace to continue during the remainder of the calendar year, with a dozen new locations planned before the end of 2015.

That said, some investors remain cautious about the warehouse retailer's shares. Based on final 2015 earnings numbers, Costco continues to trade at an earnings multiple of almost 27, and the company's slowing growth rate has made it less clear that the retailer deserves such a rich premium in a bull market that has already shown signs of getting long in the tooth. Even if Costco's fundamentals continue to improve at its steady pace, there's no guarantee that the stock will be able to keep pace, especially if overall market sentiment deteriorates as a result of the recent pullback.

Costco's shares reflected nervousness before the release, falling 1% in the after-market session, but Costco's release didn't come until the after-hours market had closed. Costco's results should give short-term-oriented traders some reassurance that the company still has the ability to post impressive results on the bottom line, but for long-term investors, the question remains whether Costco can continue to find ways to grow even if the U.S. economic recovery starts to give way to some of the pressures that investors have seen throughout much of the rest of the world.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns and recommends 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.