Bed Bath & Growth

Bed Bath & Beyond (Nasdaq: BBBY) reported earnings for the fiscal first quarter, and the numbers were as shiny as a gold-plated water faucet.

Net income took a nice double-digit jump of 42.7% to $82.0 million. Consolidated sales revenues (which include the company's Christmas Tree Shops and Harmon Stores assets) were $1.1 billion, representing an increase of slightly more than 23%. Same-store sales expanded by 5.1%, on top of last year's Q1 jump of 4.4%. This last metric was the best part -- stores open for more than a year are where you want to see continued sales growth, since it is always a healthy sign for a retailer.

These results are a wonderful continuation of the company's earnings and sales growth success and a great start to a new fiscal year. Rick Aristotle Munarriz explored last quarter's report and found it to be spectacular, as well. He noted something at that time that I have no choice but to repeat because, in my opinion, it's still relevant: the sales of homes as cultivated by this friendly low-interest rate environment remains a positive catalyst on the stock.

However, Greenspan is coming. Remember that. Next week, we could see 50 basis points worth of tightening. For a company like this, the oncoming cycle of rate increases will probably make for more challenging times. Even if the company continues to grow as well as it has given a less-accommodative stance by the Fed, keep in mind that entering the stock at this time could represent a risk, because perception and psychology can and will rule Wall Street. If the institutional bigwigs decide it's time to leave this bed & bath -- no matter how clean and cozy it is -- then now may not be the time to initiate a long-term position.

The best any of us can really do is look at the underlying fundamentals of a company and decide whether many years of holding will be beneficial in the end. We don't, after all, have a crystal ball. Bed Bath & Beyond is certainly a quality company; a check of its ratings from the outstanding tool Investor's Business Daily shows high marks when it comes to earnings, sales, margins, and management of stockholder equity. Its relative-strength grade indicates that the stock is currently a laggard, and we can see this graphically. So, for the true believers out there, now might be a good time to add to an existing position.

All considerations must be taken into account, though. Bed Bath & Beyond has strong competition. Target (NYSE: TGT), Wal-Mart (NYSE: WMT), Home Depot (NYSE: HD), and certainly Linens 'n Things (NYSE: LIN) will always be there, trying to steal as much of the retailer's revenues as possible. The company will certainly grow, either by future acquisitions or more store locations...question is, can it expand without experiencing significant growing pains? And what effect will gas costs have going forward, whether they go up or down?

So, next time you're taking a bath (one that is hopefully of the relaxing kind, not of the I-just-lost-a-bunch-dough kind), why not muse on these things before jumping into this particular bed. Due diligence is always a must.

Fool contributor Steven Mallas owns no shares in any of the companies mentioned in this piece.