Select Comfort (NASDAQ:SCSS) noted back in December that it was comfortable with 2005 earnings guidance of $1.05 to $1.08 per share "with some upside potential." It wasn't kidding about that last part.

Last night, the maker of the high-end Sleep Number beds clocked in with $1.14 a share in earnings. Select Comfort enjoyed a 43% bottom-line improvement as sales climbed 24% higher to hit $691.1 million. Growth accelerated in the fourth quarter, with sales and earnings per share rising by 26% and 56%, respectively. It was another strong quarter for the company, which was first recommended to Motley Fool Hidden Gems subscribers in the spring of 2004.

Same-store sales increased by 15% through 2005 -- the fourth straight year that comps rose by 15% or more. That was partly the result of sleep-hungry patrons who didn't flinch at a 5% price hike in December. The average bed sells for $2,151, 9% higher than it did a year ago.

The company continues to make headway toward its goal of $1 billion in sales and $120 million in operating profits in 2007. Operating margins have played along, rising from 9% in 2004 to 10% in 2005. The company expects 11% operating margins in 2006, though stock compensation expenses will likely shave roughly $0.10 per share off 2006 earnings. However, even with that expensing nibble, Select Comfort aims to grow earnings to between $1.30 and $1.37 per share this year.

Select Comfort's got the right approach. It currently owns less than 2% of the mattress market, which is still dominated by lower-priced spring- and foam-mattress heavies like Sealy, Serta, and Simmons. But don't assume that Select Comfort's success indicates favorable momentum for the high-end bedding industry in general. Rival Tempur-Pedic (NYSE:TPX) disappointed investors back in September.

Select Comfort is a special kind of growth story. It's also got a debt-free balance sheet, and it isn't afraid to use it. The company bought back 7% of its outstanding stock last year, but it still managed to close out the year with more cash on its balance sheet.

Beneath the bedsheets and all over the balance sheets, Select Comfort's got it covered when it comes to helping investors sleep well at night.

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Longtime Fool contributor Rick Munarriz thinks that home is where the hard is. He does not own shares in any of the companies mentioned in this story He is also part of the Motley Fool Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.