Stitch Fix (NASDAQ:SFIX) has been a volatile stock this year. Investors cheered as the share price rocketed up to over $100 in January, only to be disappointed as the stock crashed down below $60 after what seemed to be a disappointing earnings report. But there were some hidden gems in the most recent results that investors and the market may be overlooking. On a Fool Live episode recorded on March 17, Fool contributors Brian Feroldi and Brian Withers discuss what investors in the online clothing retailer have to be excited about.

Brian Withers: I'm up with Stitch Fix and I put all the tickers in the chat, so you have them, as well as the number of Fool members that have favorited these stocks. Analysts in the market, we're disappointed with Stitch Fix most recent earnings report. But when I wasn't, and there's some gems in the earnings report that long-term investors would love but might have missed. But first I'm going to cover the headlines.

Twelve percent year-over-year client and revenue growth, but minus 7% in revenue per active clients. So how much each client spends, each active client spends. But the management team said the reason that declined was because they are adding so many new clients and they just haven't had the full year of spending yet. For the last three quarters, and I'm focusing on active clients, active clients have increased every quarter, 3%, 7%, and 3% in the most recent quarter. So sequential improvement of adding customers to their base. The revenue miss wasn't entirely under their control. They had shipment delays during the earnings season and then delaying their direct buy to non-Stitch Fix clients. That's going to be a revenue booster coming forward. Twenty-five percent of the women have used direct buy already. So they are ramping up the inventory ahead of the inventory launch of this, when they roll it out to non-Stitch Fix clients. This is really going to add more incremental revenue to their overall model.

Another thing that investors might have missed is their experience... They're working with a vendor-managed inventory model which will allow them access to more inventory for their partners and have the partners own the inventory. It puts both of them on the hook to make sure these things sell and go through. What do you guys think?

Brian Feroldi: Well, I have a question for you. My kids are Stitch Fix shareholders, but do you think the world opening up is going to harm Stitch Fix, or be a non-event? Or be a benefit?

Withers: I think it's a neutral, I think that's a great question to ask. Stitch Fix has grown but not as much as we may have expected through the pandemic. It wasn't something like the Zoom platform which everybody maybe flocked to. But I think more customers, the incremental increase in customers over the last three quarters, their platform is improving and more customers are seeing the benefits. So I think they're going to continue to inch up the growth and this direct buy and the vendor-managed inventory should even accelerate in the future.

Feroldi: My kids will be happy to hear that.

Withers: Yeah. That's Stitch Fix.

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.