Earlier this month, Kirkland's (NASDAQ:KIRK) -- a home furnishings retailer that sells things such as framed art, mirrors, and what interior designers like to call "accent rugs" -- hit a new 52-week low of $6.44. Since then, however, the stock has traded up nicely, closing at $7.03 on Friday, the day the company announced its third-quarter earnings. To be sure, those results were far from thrilling, but investors were nonetheless pleased, sending the company's shares up about 2.6% on the day.

You can check the announcement in full here, but the short story on Kirkland's quarter is this: While overall sales increased to the tune of nearly 8.9% relative to the same period last year, comparable-store sales declined by 3.4%.

How to read that mixed bag of tea leaves? Well, the current year's comparables represent a vast improvement over 2004's third quarter, when comparable-store sales declined by more than 13% from 2003. Moreover, this year's third-quarter results reflect the impact of three hurricanes that, by Kirkland's estimates, dinged the Tennessee company's bottom line by $1.2 million to $1.4 million in revenue.

All told, Kirkland's posted a loss of $2.5 million in Q3, a figure that nets out to a loss of $0.13 per diluted share. Hurricanes and all, however, those numbers still represent an uptick over this time last year, when the company checked in with a loss of $3 million, or $0.16 per share.

So should Fools rush in? After all, the firm's stock isn't that far off its recent 52-week nadir.

In a word, no. On a trailing-12-month basis, the company sports a triple-digit price-to-earnings ratio, and while analysts' forward-looking estimates are quite rosy, I'm not similarly sanguine. Kirkland's is a tiny firm, after all, one with a market cap of roughly $136 million. And for the trailing three years that ended on Friday, the company shed more than 25.5% of its value on an annualized basis.

When you compete against the bigger and cheaper (on a P/E multiple basis) likes of Bed Bath & Beyond (NASDAQ:BBBY), Linens 'n Things (NYSE:LIN), and Michaels Stores (NYSE:MIK), a company simply has to do better than that to make a compelling investment case for itself.

For related retail Foolishness:

Bed Bath & Beyond is a Motley Fool Stock Advisor recommendation.

Shannon Zimmerman runs point on The Motley Fool Champion Funds newsletter service and owns none of the companies mentioned above. You can check out the Fool's disclosure policy by clicking right here.