Bed Bath & Beyond
Net income took a nice double-digit jump of 42.7% to $82.0 million. Consolidated sales revenues (which include the company's Christmas Tree Shops and Harmon Stores assets) were $1.1 billion, representing an increase of slightly more than 23%. Same-store sales expanded by 5.1%, on top of last year's Q1 jump of 4.4%. This last metric was the best part -- stores open for more than a year are where you want to see continued sales growth, since it is always a healthy sign for a retailer.
These results are a wonderful continuation of the company's earnings and sales growth success and a great start to a new fiscal year. Rick Aristotle Munarriz explored last quarter's report and found it to be spectacular, as well. He noted something at that time that I have no choice but to repeat because, in my opinion, it's still relevant: the sales of homes as cultivated by this friendly low-interest rate environment remains a positive catalyst on the stock.
However, Greenspan is coming. Remember that. Next week, we could see 50 basis points worth of tightening. For a company like this, the oncoming cycle of rate increases will probably make for more challenging times. Even if the company continues to grow as well as it has given a less-accommodative stance by the Fed, keep in mind that entering the stock at this time could represent a risk, because perception and psychology can and will rule Wall Street. If the institutional bigwigs decide it's time to leave this bed & bath -- no matter how clean and cozy it is -- then now may not be the time to initiate a long-term position.
The best any of us can really do is look at the underlying fundamentals of a company and decide whether many years of holding will be beneficial in the end. We don't, after all, have a crystal ball. Bed Bath & Beyond is certainly a quality company; a check of its ratings from the outstanding tool Investor's Business Daily shows high marks when it comes to earnings, sales, margins, and management of stockholder equity. Its relative-strength grade indicates that the stock is currently a laggard, and we can see this graphically. So, for the true believers out there, now might be a good time to add to an existing position.
All considerations must be taken into account, though. Bed Bath & Beyond has strong competition. Target
So, next time you're taking a bath (one that is hopefully of the relaxing kind, not of the I-just-lost-a-bunch-dough kind), why not muse on these things before jumping into this particular bed. Due diligence is always a must.
Fool contributor Steven Mallas owns no shares in any of the companies mentioned in this piece.
