Source: The Container Store

With The Container Store (NYSE:TCS) set to report revenue and earnings for the first quarter of its 2014 fiscal year on July 8, investors are probably trying to decide what to do with the retailer's shares. At current prices, The Container Store's shares can be picked up at just 10% above their 52-week low and a whopping 41% discount from their 52-week high; this could incentivize shareholders to get in on the cheap. Given the company's earnings history, though, might now be a better time to go with The Michaels Companies (NASDAQ:MIK) instead?

Investors have modest but positive expectations
Heading into earnings, analysts believe that The Container Store will post better results on both the top and bottom lines than it did in the first quarter of 2013. That outlook isn't necessarily something to be envious about, however. For the quarter, Mr. Market expects the retailer to report revenue of $174.2 million, up 9% from the $159.6 million management reported in last year's quarter. If this forecast comes to fruition, it will likely be because of the company's 5% jump in store count from 60 locations last year to 63 now, combined with a low-to-mid increase in comparable store sales.

  Forecasted Last Year's
Revenue $174.2 million $159.6 million
Earnings Per Share -$0.06 -$0.10

Source: Yahoo! Finance and The Container Store

From a profitability perspective, the picture isn't quite as impressive. For the quarter, analysts anticipate that The Container Store will report a loss per share of $0.06. Although this may seem bad, it represents an improvement over the $0.10 loss per share the business reported last year (assuming its current number of shares since the retailer was not publicly traded during the first quarter of 2013.) This narrowing of losses will likely be attributable to an increase in revenue, combined with lower costs in relation to sales.

Is The Container Store a slam dunk?
Over the past four years, The Container Store has had some pretty nice growth. Between 2010 and 2013, the company saw its revenue climb 32% from $568.8 million to $748.5 million. A good portion of this growth appears to have come from the company's aggregate comparable store sales growth of 25% during this timeframe, but investors must also attribute the retailer's performance to a 29% jump in store count from 49 locations to 63.

TCS Revenue (Annual) Chart

TCS Revenue (Annual) data by YCharts

As a result of reduced impairments, partially offset by increase in the company's cost of goods sold, management reported that The Container Store's net loss of $45.1 million turned into a gain of $8.2 million.

Source: The Container Store

During a similar four-year period, specialty retailer Michael's saw its top line rise a more modest 13% from $4 billion to $4.6 billion. Although Michael benefited from an aggregate comparable store sales increase of 10%, the big area where management fell short in was adding stores. Between 2010 and 2013, the retailer saw its store count rise just 6% from 1,182 locations to 1,257.

TCS Net Income (Annual) Chart

TCS Net Income (Annual) data by YCharts

From a profit standpoint, however, the company did great. This was due in part to rising revenue, but was also because of a reduction in interest expense and a falloff in its selling, general, and administrative expenses from 61.2% of sales to 60.1%. As a result, the company's net income grew 156% from $103 million to $264 million.

Foolish takeaway
Based on analyst estimates, the outlook for The Container Store is better than the results management posted last year. It's still not something that shareholders should become terribly excited about, however. This is especially true when you consider that the company's long-term results have been good on the top line but nothing too special on the bottom line after removing the impact of impairments earlier on. In all fairness, Michael's, with its slow growth, doesn't appear to be a top growth play, but the increase in profits that the company has shown indicates that it could make for a very interesting business to analyze in more detail before discarding it.