To quote movie character Forrest Gump, "It must be hard being a king."
Indeed. Just ask eBay
Bed Bath & Beyond
For the fourth quarter, the company earned $0.59 per share from $181 million of net income -- 25.5% growth compared with the same period a year ago. Its income was derived from $1.5 billion in sales, an improvement of 13.1% from the fourth quarter in fiscal 2003. Comparable same-store sales increased 5.1%.
Comparable same-store sales for the year increased 4.5%, leading to full-year revenue growth of 15% to $5.1 billion. The positive sales environment allowed the company to post its 13th consecutive year of record net income, which climbed to $505 million, or $1.65 per share.
Along with that strong growth, investors will take comfort in the company's operating margins, which improved to 15.4% from 14.3% in 2003. Bed Bath & Beyond's healthy profit margins allow it to have positive cash flow, creating trailing 12 months of owner earnings (or structural free cash flow) of $411.7 million. Naturally, a strong cash flow situation allows the company to keep a fresh-out-of-the-bath, squeaky-clean balance sheet containing no long-term debt and cash and marketable securities totaling $851.4 million.
So with all of the positives mentioned, why has the stock been a sleeper over the past year? Perhaps the market is no longer enamored with royalty, instead asking the question, "Is that all you've got?"
Or, maybe an enterprise that is valued at 25 times its trailing-12-months owner earnings just isn't attracting the buyers the way it used to. While Bed Bath & Beyond certainly isn't a deep bargain, it definitely warrants being watched to see if a discount purchase can be made sometime soon.
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Fool contributor Jeremy MacNealy does not own shares in any of the companies mentioned.