Why Shares of Select Comfort Corp. Popped 25% Today

By Travis Hoium Markets Fool.com

What happened

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Shares of mattress makerSelect Comfort Corp. (NASDAQ: SCSS) jumped as much as 25.2% on Thursday after the company reported better-than-expected earnings. At 12:30 p.m. EDT shares were still up an impressive 24.9% on the day.

So what

Revenue rose 12% in the first quarter to $394 million, including a 3% jump in same-store sales. Net income was up 88.6% to $24.5 million, and earnings per share more than doubled to $0.56. Analysts were expecting only $0.46 per share in earnings.

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Management also increased its full-year earnings outlook from a range of $1.20 to $1.40 per share to a new range of $1.25 to $1.50 per share. This outlook includes $0.15 to $0.22 per share in costs related to the Sleep Number 360 launch, the company's newest product coming to market.

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Now what

Operations continue to perform well and management is very bullish on the new Sleep Number 360 smart beds. If same-store sales can continue to improve by low single digits, bolstered by new-store openings, the company's financial performance looks like it will be on a positive path. Shares aren't cheap at 21 times the high end of 2017 earnings estimates, but with great products and an effective retail strategy, Select Comfort is poised to be a great stock for long-term investors.

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Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.