Earnings season is just about over, with almost all companies already having reported their quarterly results. But there are still a few companies left to report, and Mattress Firm is about to release its quarterly earnings report.

The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed, knee-jerk reaction to news that turns out to be exactly the wrong move.

Few businesses sound simpler than selling mattresses, but Mattress Firm burst onto the scene in late 2011 to plenty of hoopla and immediate share-price gains. Since then, though, the business has cooled off. 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 on Tuesday.


Stats on Mattress Firm

 

 

Analyst EPS Estimate

$0.32

Change From Year-Ago EPS

(49%)

Revenue Estimate

$261.5 million

Change From Year-Ago Revenue

39%

Earnings Beats in Past 4 Quarters

4

Source: Yahoo! Finance.

Will Mattress Firm stay solid this quarter?
Over the past few months, analysts haven't budged on their calls for Mattress Firm's earnings, either for the just-ended quarter or for the fiscal 2014 year. The stock, though, has moved sharply higher, rising nearly 30% since mid-December.

Mattress Firm came public during a time of huge growth for the mattress industry. But after timing its IPO to perfection, Mattress Firm and its industry peers ran into tough times. Rival Tempur-Pedic lost nearly half its value in a single day last June after slashing its earnings guidance by nearly a third. Select Comfort followed suit shortly thereafter with its own troubles, although its stock didn't fall as much as Tempur-Pedic's did because its business held up somewhat better. Even as recently as December, Mattress Firm cited weak conditions in cutting back on its outlook for the full 2013 fiscal year.

Since then, though, improving conditions in the economy could spell relief for Mattress Firm and its peers. Tempur-Pedic decided last September to gain exposure to the lower end of the mattress market by buying Sealy. From a macroeconomic perspective, an improving housing market traditionally has boded well for furniture and mattress companies that cater to new homeowners seeking to furnish their homes, and housing has definitely been on the upswing lately.

Just yesterday, Mattress Firm got an upgrade from analyst Stifel Nicolaus, which cited the weak conditions from early 2012 as providing easy comparisons that the mattress seller can use to show accelerating growth. At the same time, by keeping expectations relatively low, Mattress Firm's management could be setting itself up for positive news and an earnings beat that's consistent with its past quarters.

In its quarterly report, watch for Mattress Firm to discuss its future plans to deal with increasing competition in the mattress space, particularly the just-closed merger of Sealy and Tempur-Pedic. Only by keeping the upper hand can Mattress Firm make the most of a rebound in housing.

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The article Mattress Firm Earnings: An Early Look originally appeared on Fool.com.

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. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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