A Turnaround Story for the Ages

Talk about a reversal of fortune. This past week, Pier One Imports (NYSE: PIR  ) , maker of fine home furnishings, released its earnings report for the second quarter of 2012. The news was pretty good, and longtime investors should be pleased with how far the company has come since the financial crisis. 

Earnings in detail
Pier One made a profit of $26.2 million for the quarter, earning $0.24 per share. That's a notable gain from the same quarter last year, when the company made $16.6 million. However, investors need to remember that these earnings include several one-time items, such as an income-tax benefit of nearly $6 million. Removing these one-time gains brings the company's earnings closer to $17 million, a number that's not nearly as impressive as the first glance may show.

Still, investors should be happy with other areas of growth. For instance, comparable-store sales increased 6.7% year over year, while revenue increased 8.3% to $368 million. All of this good news led the company to increase its full-year earnings guidance from a range of $1.08 to $1.14 per share to $1.10 to $1.16 per share. While this may seem like run-of-the-mill earnings stuff for most companies, many Pier One shareholders must be breathing a sigh of relief.

How far we've come
After all, it wasn't that long ago that there was some speculation of whether Pier One would be delisted. The company was one of many to see its stock decline drastically during the financial crisis, and in March 2009, Pier One's stock hit an all-time low of $0.11 per share. Pier One was hit especially hard, though, as people who lost their homes to foreclosures and evictions didn't have any reason to spruce up their pads with Pier One's products.

Since those dark days, the company has had an impressive turnaround. In the past 12 months Pier One's stock has risen 74%, and since March 2009 it has grown by an incredible 17,463%! But of course, these gains mean nothing unless we can see how the company looks compared with its competitors.

Company Name

P/E

Operating Margin

Quarterly Revenue Growth

Dividend Yield

Pier One Imports 12.61 11% 8% 0.80%
Bed Bath & Beyond (Nasdaq: BBBY  ) 16.63 17% 5% N/A
Target (NYSE: TGT  ) 14.87 7% 3% 2.20%
Wal-Mart (NYSE: WMT  ) 15.81 6% 5% 2.10%

You can see that Pier One is an excellent growth stock. With large revenue growth and an above-average operating margin, the company looks like a good pick for the low P/E it's sporting.

No matter which company you choose to invest in, we here at the Fool always recommend that you pick a business you understand, even if it's something as simple as shopping at Pier One that gives you a deeper knowledge of the company that can improve your investment choices. That's why we've found some Middle-Class Millionaire-Makers -- companies that everyone knows and loves because they use them in some way every day. Of course, these are often stocks that Wall Street's too rich to notice, which is why there's some serious opportunity here. So sign up now and get your free report!

Fool contributor Mark Reeth owns none of the stocks mentioned above, and he has no idea what you'd find in the Beyond section of Bed, Bath & Beyond. He's not sure he wants to find out. Follow him on Twitter, @ChristmasReeth.

Motley Fool newsletter services have recommended buying shares of Bed Bath & Beyond. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.


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