NEW YORK (TheStreet) -- Mattress Firm (MFRM - Get Report) shares are climbing, up 13.9% to $54.70 on Monday, after the company reported a 35.5% increase in preliminary second quarter net sales to $410 million.
The increase in net sales led the company to increase its second quarter and full year adjusted earnings guidance ahead of analysts expectations to between $0.58 and $0.61 per diluted share, and between $2.03 and 2.13, respectively.
Analysts are expecting second quarter earnings of 49 cents per diluted share and full year earnings of $1.95 per diluted share.
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The company reports its second quarter results on September 5.
TheStreet Ratings team rates MATTRESS FIRM HOLDING CORP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate MATTRESS FIRM HOLDING CORP (MFRM) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, disappointing return on equity and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 0.3%. Since the same quarter one year prior, revenues rose by 20.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- MATTRESS FIRM HOLDING CORP's earnings per share declined by 37.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MATTRESS FIRM HOLDING CORP increased its bottom line by earning $1.54 versus $1.18 in the prior year. This year, the market expects an improvement in earnings ($1.94 versus $1.54).
- 39.09% is the gross profit margin for MATTRESS FIRM HOLDING CORP which we consider to be strong. Regardless of MFRM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 2.30% trails the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Specialty Retail industry. The net income has significantly decreased by 35.7% when compared to the same quarter one year ago, falling from $12.01 million to $7.72 million.
- Net operating cash flow has significantly decreased to $7.13 million or 55.34% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: MFRM Ratings Report