uploads/2016/03/tpx-pm.jpg

Longbow Research Rated Tempur Sealy as a ‘Buy’

By

Updated

Price movement of Tempur Sealy

Tempur Sealy International (TPX) has a market cap of $3.6 billion. TPX fell by 0.41% to close at $57.91 per share as of March 15, 2016. The price movement on a weekly, monthly, and year-to-date (or YTD) basis is -2.3%, 7.0%, and -17.8%, respectively.

Currently, TPX is trading 0.75% below its 20-day moving average, 2.3% below its 50-day moving average, and 16.9% below its 200-day moving average.

The Guggenheim S&P Mid-Cap 400 Pure Growth ETF (RFG) invests 1.6% of its holdings in Tempur Sealy. The ETF tracks a factor-weighted index of the S&P 400 companies exhibiting the strongest growth factors.

The Vanguard Small-Cap ETF (VB) invests 0.12% of its holdings in Tempur Sealy. The ETF tracks the CRSP US Small-Cap Index. The market-cap-weighted index includes the bottom 2%–15% of the investable universe. The YTD price movement was -1.8% as of March 14, 2016.

The market cap of Tempur Sealy’s competitors are as follows:

  • Newell Rubbermaid (NWL) — $11.1 billion
  • Select Comfort Corporation (SCSS) — $906.5 million
Article continues below advertisement

Longbow Research initiated Tempur Sealy coverage

Longbow Research initiated the coverage of Tempur Sealy International with the “buy” rating and set the price target at $77.00 per share.

Performance of Tempur Sealy in recent 4Q15 and 2015

Tempur Sealy International (TPX) reported fiscal 4Q15 net sales of $767.3 million, a rise of 2.9% compared to net sales of $745.5 million in fiscal 4Q14. The company’s cost of sales as a percentage of net sales fell by 3.3%, and its operating income rose by 20.0% in fiscal 4Q15 compared to fiscal 4Q14.

Its net income and EPS (earnings per share) fell to -$11.3 million and -$0.18, respectively, in fiscal 4Q15 compared to $46.6 million and $0.75, respectively, in fiscal 4Q14. It reported the adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) and adjusted EPS of $132.7 million and $0.99, respectively, in fiscal 4Q15, a rise of 14.4% and 15.1%, respectively, compared to fiscal 4Q14.

Fiscal 2015 results

In fiscal 2015, Tempur Sealy International (TPX) reported net sales of $3,151.2 million, a rise of 5.4% YoY (year-over-year). The company’s net income and EPS fell to $73.5 million and $1.17, respectively, in fiscal 2015, compared to $108.9 million and $1.75, respectively, in fiscal 2014.

Meanwhile, its accounts receivable and inventories fell by 1.7% and 8.3%, respectively, in fiscal 2015. It reported that its cash and cash equivalents rose to $153.9 million in fiscal 2015 compared to $62.5 million in fiscal 2014. Its current ratio and debt-to-equity ratio fell to 1.1x and 8.1x, respectively, in fiscal 2015, compared to 1.3x and 11.7x, respectively, in fiscal 2014.

The price-to-earnings and price-to-sales ratios of Tempur Sealy were 49.5x and 1.2x, respectively, as of March 15, 2016.

The company has projected its adjusted EBITDA in the range of $500 million–$550 million, which includes ~$10 million of unfavorable foreign currency impact based on forecasted exchange rates.

Advertisement

More From Market Realist