You'll find a lot of Hooker Furniture (NASDAQ:HOFT) fans at the Fool. No, it's not just because the stock has clipped up almost 85% since it was first recommended by Tom Gardner in Hidden Gems way back in late summer of 2003. It's because the firm keeps rewarding shareholders' faith with solid operating results.

Yeah, I'm sure I wasn't the only one who gave this stock the hairy eyeball and looked for something sexier than Hooker. Please, furniture? Won't the Chinese eat them alive? If Jennifer Convertibles (AMEX:JEN) is willing to sell me two leather couches plus a cushy armchair for under $1,500, how much profit can there be in this business? What happens when Americans stop mortgaging themselves for 10-room McMansions, using their houses as home-equity ATMs, and jonesing for furniture?

Not a problem, apparently. Hooker finished the year with sales up 12% over last year. Yawning? OK, net income was up 24% -- despite some pretty heavy one-time charges -- to $1.56 per share. Still not enthused? For the fourth quarter, net income was up 51% over the prior-year period. That's better performance than peer La-Z-Boy (NYSE:LZB), but shy of the ramp-up at Stanley Furniture (NASDAQ:STLY), which also happens to be a HiddenGems pick.

Fast, accelerating earnings growth not enough for you? How about margins? Better costs on goods and improved product mix led to operating margins of 9%, up from 8.3% last year. Net margins -- pikers! -- notched up only half a percent to 5.3%, a situation blamed on increased SG&A expenses for Sarabanes-Oxley compliance, as well as the above-mentioned restructuring charges.

Management said it believes there's still plenty of opportunity for the firm to get even more profitable, and given the recent results, you may want to give the team the benefit of the doubt. That will be necessary because buying today will not bring the same, rock-bottom, eight-ish enterprise value-to-free cash flow ratio that Hooker sported back in late 2003 but a much pricier 100. Ouch.

The main culprit looks like the 64% increase in inventories. Management has said the increase is related to new warehouses in Asia and changes to prepare for a direct-order system. Those sound like reasonable explanations, but Fools know (free trial required) that a divergence from sales of this magnitude bears watching, especially given the modest, single-digit growth predicted for the first quarter of 2005.

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Seth Jayson is a pretty crummy Hooker customer, not having purchased any furniture for the past half decade. At the time of publication, he had positions in no company mentioned. View his stock holdings and Fool profile here. Fool rules are here.