On the surface, Costco's (NASDAQ: COST) fiscal third-quarter earnings report may have seemed disappointing. Total sales for the period rose just 1.9% year over year to $52.6 billion and earnings per share fell from $3.05 in the year-ago period to $2.93. Analysts, on average, were expecting the membership-based wholesale retailer to report revenue of $54.6 billion and earnings per share of $3.29. Yet Costco shares surged more than 4% higher on Friday as investors digested the results.

Closer scrutiny of the period's performance reveals a healthy core operation with a growing base of loyal members and impressive bottom-line momentum (when excluding one-time items).

First and foremost, it's worth noting that Costco's core business is doing better than its reported consolidated top-line growth rate suggests. Consider that sales at stores open for more than one year (comparable sales) rose 3.5% year over year when excluding the impacts from changes in gasoline prices and foreign exchange. This rate is well ahead of the company's 1.9% growth rate for total sales. 

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Source Fool.com