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Tempur Sealy International Announces Its Projections for 2016

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Sep. 28 2016, Updated 5:04 p.m. ET

Price movement

Tempur Sealy International (TPX) has a market cap of $4.4 billion. It fell 0.07% to close at $74.45 per share on September 27, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -1.1%, -5.5%, and 5.7%, respectively, on the same day.

TPX is trading 3.9% below its 20-day moving average, 0.86% below its 50-day moving average, and 16.4% above its 200-day moving average.

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Related ETF and peers

The SPDR S&P Homebuilders ETF (XHB) invests 4.4% of its holdings in Tempur Sealy. The ETF tracks a broad-based, equal-weighted index of US companies involved in the homebuilding industry. The YTD price movement of XHB was 0.71% on September 27, 2016.

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

  • Newell Rubbermaid (NWL): $25.3 billion
  • Steelcase (SCS): $1.7 billion
  • Select Comfort (SCSS): $1.2 billion

Performance of Tempur Sealy in 2Q16

Tempur Sealy reported 2Q16 net sales of $804.4 million, a rise of 5.2% compared to $764.4 million in 2Q15. The company’s gross profit margin and operating income rose 7.6% and 92.7%, respectively, in 2Q16 compared to the prior year’s period.

Its net income and EPS (earnings per share) rose to $21.3 million and $0.35, respectively, in 2Q16 compared to $21.2 million and $0.34, respectively, in 2Q15. It reported adjusted EPS and adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $0.92 and $124.7 million, respectively, in 2Q16, a rise of 73.6% and 38.1%, respectively, compared to 2Q15.

TPX’s cash and cash equivalents fell 10.4%, and its inventories rose 13.3% in 2Q16 compared to 4Q15. Its current ratio and debt-to-equity ratio rose to 1.3x and 16.2x, respectively, in 2Q16 compared to 1.1x and 8.1x, respectively, in 4Q15.

The company has announced a $200 million increase in its share repurchase program. After the announcement of a share repurchase program on February 4, 2016, it repurchased ~4.4 million shares worth ~$256 million through July 27, 2016.

Projections

Tempur Sealy has made the following projections for fiscal 2016:

  • net sales to fall 1%–3% compared to the prior year’s period.
  • adjusted EBITDA of $500 million–$525 million
  • a 20% rise in EPS compared to the prior year’s period

 It will announce its fiscal 3Q16 results on October 27, 2016.

In our next and final part of the series, we’ll take a look at Nike (NKE).

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