What happened

Shares of Michaels Stores (NASDAQ:MIK) soared 73% higher in September 2019, according to data from S&P Global Market Intelligence. The surge centered on a solid earnings report.

So what

The arts and crafts retailer reported second-quarter results on Sept. 4, edging out analyst estimates across the board with a 7% year-over-year earnings boost in spite of 2% lower revenues. Michaels' stock spiked as much as 27% higher later that day before settling down to a 12% single-day gain at the closing bell. The report sparked a fire under the stock as analysts weighed in with rosy reports over the next few days. One week later, Michaels investors had pocketed a total gain of 80%.

A smiling young woman walks around in her summer clothes on a sunny day, carrying several shopping bags.

Image source: Getty Images.

Now what

Don't forget that Michaels entered last month's earnings report in bad shape. Hurt by the Trump administration's tariffs on goods imported from China, including investor worries regarding another round of even sharper import fees taking effect in December, Michaels' stock had taken a 67% dive over the previous 52 weeks. The sharp bounce brought Michaels back to share prices not seen since June. The stock is still trading 36% below its year-ago price.

You can pick up Michaels shares today at the bargain-bin valuation of 4.8 times trailing earnings or 3.6 times free cash flows. The stock is priced for absolute disaster even though the business is running just fine -- under interim management and the usual assault from e-commerce alternatives. There are no easy answers here, but Michaels looks mighty affordable if you think the company will be able to survive the holiday season and find a high-quality CEO for the long term. I'm sort of tempted myself, to be honest.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.