Motley Fool Hidden Gems recommendation Select Comfort (NASDAQ:SCSS) released bad news after market close on Tuesday.

That is to say, bad news if you're one of the many people who have sold 14% of the company's float short. In a brief announcement, which the company thoughtfully transcribed and filed with the SEC (here), Select Comfort management basically reported that everything is going swimmingly with this maker of inflatable mattresses.

Select Comfort noted that it expects to approach 12% same-store-sales growth, year over year, in the third quarter. Moreover, the company expects to exceed its previously published expectations of 15%-20% sales growth and 20%-25% earnings growth, both in third-quarter and full-year fiscal 2005.

Despite the company admitting that it faces margin pressures arising from increased fuel costs, Select Comfort held its earnings forecast for fiscal 2005 steady at $1 to $1.08 per share. Should the company succeed in hitting just the low end of that forecast, it will achieve the top end of its earnings growth prediction (25%). And if Select Comfort manages to hit $1.08 per diluted share, well, that would make for 35% year-on-year growth.

Not coincidentally, Select Comfort has been giving its chances of success at meeting those earnings targets a bit of a boost in recent months. As noted in the firm's 8-K filing, so far this quarter it has managed to buy up 4% of its shares outstanding, or about 1.3 million shares. And the fewer shares there are among which to divvy up firmwide profits at quarter end, the better the earnings per share will look.

That's one reason (of many) that we at the Fool like to monitor not just earnings, but also free cash flow (FCF) of our recommendations. Historically, Select Comfort's GAAP net earnings overstate its true cash profitability by about 6%. So let's assume Select Comfort hits just the top end of its previous growth prediction -- 25% -- this year. That would give the company about $39.5 million in net profits. And free cash flow should therefore be somewhere in the vicinity of $37.1 million.

With an enterprise value of $655 million, $37.1 million in FCF, and an enterprise value-to-free cash flow ratio of 17.6, Select Comfort looks like a bargain if it hits 25% growth this year. If it hits 35% -- the stock is positively on sale. In other words, this looks like a very bad year to be short Select Comfort.

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Fool contributor Rich Smith does not own shares in Select Comfort.