On Thursday, Cato (NYSE:CTR) reported earnings for the fourth quarter and fiscal year 2006. The value-priced women's fashion retailer turned in some stylish-looking numbers, but management was quick to acknowledge that the net income figure is wearing pumps. In other words, there were several one-time factors giving reported profits a boost.

A 53rd week in the 2006 fiscal year added $17.2 million to the top line, which -- at a 6% net profit margin -- translates to roughly $1 million of profits. Add in the $3 million after-tax gain on a hurricane insurance payout, and the 15% net income growth looks more like anemic 6% growth on a normalized basis.

The company also projected earnings for the upcoming fiscal year, which it expects "to be a more challenging year for earnings growth." Cato may be wearing flats next year -- it's anticipating 0%-3.5% growth in 2007. Here's the silver lining, though: If you use my normalized 2006 earnings figure of approximately $47.5 million, growth in 2007 looks a whole lot better -- more like 8%-12%. As an investor, you're paying for future results, not what just happened. Viewing the situation in this light, Cato's style doesn't look to be as cramped as it initially seemed.

So did investors drive the stock down on the poor-looking guidance, only to subsequently clutch shares when they realized the guidance was actually stronger than the numbers indicated? Well, not exactly -- they did just the opposite, in fact. Shares jumped at the open on the appearance of an earnings beat, and then quickly got taken to the returns desk. The market clearly doesn't work the same way as my brain. (If it did, I would own an island or two.) That's fine -- I can't blame it for being lukewarm on these shares. I'm not particularly enthusiastic about the stock here, either. It's priced at a bit of a premium to its growth rate, even when using my refashioned figures. I'd say there are more attractive retail buys out there right now.

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Much like Cato customers, Fool contributor Toby Shute appreciates on-trend fashions at exceptional value. He welcomes your feedback.