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Will Mattress Firm Holding Corp (MFRM) Deliver on Its Big Growth Plans?

Tomorrow, Mattress Firm Holding Corp (NASDAQ:MFRM) will release its latest quarterly results. As the consumer segment of the economy has picked up steam over the past several years, discretionary spending on things like mattresses is finally starting to grow, and Mattress Firm has managed to capitalize on that trend.

Mattress Firm Holding Corp (NASDAQ:MFRM) is one of the newer players in the publicly traded markets, having had its IPO in late 2011. Since then, though, it has made a strong impression, overcoming some big challenges to rise more than 50% from its opening-day IPO close. Let’s take an early look at what’s been happening with Mattress Firm over the past quarter and what we’re likely to see in its quarterly report.

Stats on Mattress Firm

Analyst EPS Estimate $0.36
Change From Year-Ago EPS 16%
Revenue Estimate $274.39 million
Change From Year-Ago Revenue 31%
Earnings Beats in Past 4 Quarters 3

Source: Yahoo! Finance.

Will Mattress Firm’s earnings let investors sleep well this quarter?
Mattress Firm Holding Corp (NASDAQ:MFRM)Wall Street’s views on Mattress Firm Holding Corp (NASDAQ:MFRM)’s earnings have gotten a bit more pessimistic in recent months, as analysts have reduced April-quarter earnings estimates by $0.04 per share as well as cut a nickel from their earnings-per-share consensus for next fiscal year. The stock, however, hasn’t hesitated in its strong upward move, rising more than 30% since late February.

Much of the gains that Mattress Firm Holding Corp (NASDAQ:MFRM)’s stock has enjoyed came after the company’s previous quarterly report in late March. Even though it missed earnings estimates and saw its adjusted earnings per share fall by nearly half, favorable guidance for the full year helped earn upgrades from several analysts. With acquisitions of smaller companies, Mattress Firm has driven its revenue growth, even though same-store sales actually declined.

But Mattress Firm Holding Corp (NASDAQ:MFRM) has to deal with competitors that are highly motivated to thwart its growth plans. On one hand, Tempur-Pedic International Inc. (NYSE:TPX)‘s now-completed acquisition of Sealy has broadened the former high-end mattress specialist’s product line to cover more of the lower-end business that Mattress Firm has historically focused on. At the same time, Select Comfort Corp. (NASDAQ:SCSS) has managed to take over its primary competitor in the air-filled mattress market, giving it sole control of that segment of the overall mattress market.

The big unresolved question for Mattress Firm Holding Corp (NASDAQ:MFRM) is the extent to which the improving housing market will drive mattress sales. Traditionally, many homebuyers make purchases of big-ticket home-furnishings to go with their new homes, and as housing activity is on the rise, that should be a good sign for the industry. Yet if buyers are stretching their budgets on new homes, then less money could be left over for discretionary spending.

In Mattress Firm’s report, watch for signs of how the company plans to tackle the new Tempur-Sealy matchup. With newly invigorated competition, Mattress Firm needs to step up its game to retain its fast-paced growth.

The article Will Mattress Firm Deliver on Its Big Growth Plans? originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool owns shares of Tempur-Pedic International Inc. (NYSE:TPX).

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