Why Mattress Firm Holding Corp Shares Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of mattress retailer Mattress Firm Holding Corp (NASDAQ: MFRM  ) popped 11% today after its quarterly results and outlook impressed Wall Street.

So what: The stock has slumped since July on signs of slowing growth, but today's third-quarter results -- adjusted EPS climbed 17% on a revenue jump of 18% -- coupled with upbeat guidance are quickly easing those concerns. In fact, same-store sales increased 2.9% during the quarter while operating margins stayed relatively flat, reigniting optimism over management's ability to post profitable growth going forward.

Now what: Management now sees full-year revenue of about $1.22 billion, up slightly from its prior view of $1.19 billion to $1.21 billion, with adjusted EPS expected in the range of $1.75 to $1.83. "We implemented a number of sales initiatives during the quarter that encouraged our sales associates to improve their productivity and capture a higher percentage of sales from customers," said President and CEO Steve Stagner. "We remain focused on our strategy of driving continued sales growth and building relative market share." Given Mattress Firm's still-hefty debt load and suddenly hot stock price, however, I'd wait for a much wider margin of safety before buying into that bull talk. 

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