".a pretty nice little Saturday. We're going to go to Home Depot. Yeah, buy some wallpaper, maybe some flooring; stuff like that. Maybe Bed Bath & Beyond. I don't know. I don't know if we'll have enough time."
That's Will Ferrell, as thirtyish "Frank the Tank" in the film Old School, a campus comedy from DreamWorks. He's explaining to some students why he won't be drinking that night. Of course, the college kids look at him like he's crazy. But it's true.
I don't know when it happened, exactly, but a trip to Home Depot (NYSE:HD) and Bed Bath & Beyond (NASDAQ:BBBY) started to sound like a nice little Saturday. Recent data from Bed Bath & Beyond seems to indicate that Frank and I aren't alone in this belief.
After the close yesterday, Bed Bath & Beyond reported yet another solid quarter of growth. Its first-quarter earnings jumped 20.5% to $98.9 million ($0.33 per share), compared to last year's Q1 earnings of $82 million ($0.27 per share). As impressive as that growth is, it's actually the smallest increase in net earnings since as far back as 1999.
The company also continues to increase net sales at a torrid pace. For the quarter, sales climbed 13% to $1.2 billion. That growth was helped by a 4.4% gain in same-store sales. That's not great, but it's pretty good on top of the 5.1% growth it was up against from the prior year.
Everything appears to be going extremely well for the seller of household wares. Why, then, was the stock down more than 3% after the plethora of seemingly great news was announced? Honestly, I don't know. Maybe it's that more is expected of a company that consistently increases earnings by more than 30%. Maybe it's that the current growth has already been priced into the stock. It does boast a trailing price-to-earnings ratio that's just under 27. Its forward price-to-earnings ratio is a bit better, but at around 20, it's still no bargain.
Bed Bath & Beyond offers potential investors an interesting choice. Do you pay a slightly higher price for a company that has a solid track record of earnings growth, hoping it can keep it up? Or do you view its comparatively low growth as a slowdown that's just beginning? I can't say for sure, but I do like the company, especially since it has been consistently beating competitor Linens 'n Things (NYSE:LIN). If Bed Bath & Beyond is a bit beyond your price range, I'd certainly keep an eye on it and view dips as buying opportunities.
Fool contributor Mike Cianciolo welcomes feedback and doesn't own any of the companies in this article.
