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Mattress Firm (NASDAQ:MFRM) reported earnings after the closing bell, Tuesday March 26, for the fiscal fourth quarter. The numbers were very impressive and below I will explain why they should add up to a win for share holders.

  • Net Sales increased 37% to $258.2 million for the quarter and 43.1% for the full fiscal year to just over $1 billion.
  • Earnings per share were .30 for the quarter represented by a 50.6% increase in income from a year earlier.
  • The addition of 328 stores in fiscal 2012 via growth and acquisition increased the total number of stores by 45% to 1057.
  • Consistent adjusted operating margin of 8.3 percent.
  • Adjusted net EPS of $1.49 for fiscal 2012.
  • 77.6 million of additional credit facility to handle growth.
  • Projected EPS of $1.90 to $1.98 for 2013.

Aside from the impressive growth already presented, I really like the low forward P/E multiple and the opportunity it presents for shareholders.

Mattress Firm is trading just barely above a 20 Price-to-Earnings ratio based on the 2012 $1.49 in earnings. If it comes in even at the low end of the 2013 projection of $1.90 the stock would be trading at $38/share at the same relative ratio.

I really like the shares here. Especially for a stock that has a 52-week high of $48.18 currently trading at $31.02 there seems to be significant upside. It was also reported that the stock has a heavy short interest, which means has the potential for a massive short squeeze. With approximately 24.66% of the float shorted it would take nine full days to cover based on the average trading volume. This has the potential to move the price per share up substantially in a short period of time.

Mattress Firm is a good, aggressive growth, business with its numbers dialed in. I expect to see a good return in the short, mid and long run.

Source: Sleep Well With Mattress Firm