What happened

Shares of Michaels Companies (NASDAQ:MIK) rose 11.5% in August 2017, according to data from S&P Global Market Intelligence. The arts-and-crafts retailer presented a strong second-quarter earnings report on August 24, showing credible signs of a successful turnaround. The stock closed 8.5% higher the next day after soaring as much as 26.5% higher in the morning session.

So what

In the second quarter, Michaels' sales rose 1.2%, to $1.07 billion. Net income stayed flat, at $35.6 million, but earnings per share increased 12%, to $0.19 per share, thanks to a generous buyback program. These results landed at the top end of management's guidance and exceeded the consensus analyst projections across the board. Furthermore, comparable-store sales increased by 0.6%.

The words "Arts & Crafts" embossed in gold letters on a deeply textured slab of dark wood.

Image source: Getty Images.

Now what

Looking ahead, Michaels CEO Chuck Rubin is operating under a data-driven operating plan known as Vision 2020. Under that umbrella, management hopes to improve its inventory management and marketing efforts based on both shopping-pattern analysis and direct feedback from in-store customers. There's also a smaller online retail effort in the mix, but Rubin expects customers in the arts-and-crafts market to prefer the hands-on experience of going to a physical store.

That effort makes plenty of sense, and the stock still trades at bargain-bin valuations. You can pick up Michaels shares for less than 12 times trailing earnings and nine times free cash flows. I wouldn't be surprised to see August's momentum continuing, as long as the company keeps executing on its multi-year growth plans.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool recommends The Michaels Companies. The Motley Fool has a disclosure policy.