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Tempur-Pedic
International (TPX)
Given
the current state of the
economy, most consumers are more likely to be smart with their money
and keep
splurges to a minimum. One of the only areas
that consumers might be willing to spend a little (or a lot) extra is
on their
mattress,
especially if they are having a hard time sleeping due to increased
levels of
stress in today’s society.
According
to the Better Sleep
Council, the average person needs 7-8 hours of sleep a night, which
equates to
about 1/3rd of a person life being spent lying on their bed.
Moreover,
a good consistent night’s
sleep is a key part of a healthy lifestyle, just as much as diet
and exercise. It affects how you feel, your
relationships,
your productivity and your quality of life. While you sleep, your brain
goes to
work consolidating the day’s learning into memory and reenergizing the
body.
Given
that universal need, TempurPedic claims
to be the #1 recommended bed in America, which might just be the angle
that is helping
them to gain momentum in a space that is crowded with many choices and
levels
of quality. When you buy a TempurPedic,
you know you are getting a quality mattress that “feels” a certain way.
Now they are reaching out to even more of you…
Company Description &
Developments
TempurPedic actually got its start from a product NASA released to the
public in the
1980’s
that was used to cushion astronauts during rough takeoffs and
landings.
You might remember their popular commercial with the
wine glass on the bed that didn’t spill as someone jumped on the other
side. This lack of energy transfer makes the Tempur
Beds a favorite among couples who might toss and turn so as not to wake
the other.
Even
if you are prepared to spend
good money on a mattress, Tempur beds have long been a premium product
with
price points exceeding the average budget.
To an extent, this has been good for them as the wealthy have stayed
relatively wealthy during the downturn. To remedy
this, the company recently released their Tempur-Simplicity
line, which is lower cost line and now doubles the size of their
addressable
market. A queen size set will retail for
about $1,499.
It’s
not only American bedding that
brings in revenue for TPX, they also sell beds, bedding and pillows
internationally. In their last earnings
release they noted that Tempur Pillow sales rose 16 percent, with U.S.
sales
rising 15 percent and international sales rising 17 percent.
International
pillow sales were up 13 percent after accounting for currency
fluctuations.
The
company plans to boost its
distribution network, and is predicting that 2012 sales will be about
13 percent
to 16 percent higher than last year’s. They also increased brand
advertising to
record levels in 2011 to almost $150 million. Given their
sales momentum and the
bullish trends in the stock, TPX is doing a good job at making rough
markets
more comfortable.
Financial Profile
TemperPedic is a mid-cap (4.33 billion) company that is trading at
about 21 times
trailing earnings (P/E). Looking forward, Zacks Consensus
Estimates are
calling for that number to drop closer to 16.4 with no change in price
from
these levels 12 months from today.
TemperPedic
jumped from a Zacks Rank
3 to Rank 1 on the 10th of January.
The
mattress maker company reported
a quarterly sales increase of 25% at their last earnings
report.
It was a strong quarter to end a good year; annual
sales leapt 28% compared to 2010 with total sales of roughly 1.4
billion in
FY2011. TPX saw earnings growth of about 47% in the same
period. Tempur
is expected to earn $3.90 in FY2012 according to the Zacks Consensus
Estimate.
Earnings Estimates
The trend has certainly bullish in analyst revisions after the strong
report on
January 24th. The bulk of
analysts who cover TPX increase their estimates over the past 30 days,
for the
current and next quarter as well as FY2012 and FY2013. A few
adjusted
current quarter estimates lower. TemperPedic will
report Q1 (2012) results on April
19th.
Expectations
are for Tempur to
generate $0.84 in income this quarter. Of the 14 analysts who
cover TPX,
the consensus is for the company to grow earnings by 22.5% in FY2012
and roughly
17% in FY2013.
In
terms of the magnitude of analyst
estimate trends, we are seeing all of the consensus estimates higher
than they
were 90 days ago for Q22011 out to FY2013. The consensus for
Q2 earnings
has come in 1 cent versus 30 days ago.
TemperPedic
beat estimates last
quarter by 2.5% and has managed to exceed consensus estimates for the
past year
by an average of about 6.7%. In the past
12 months, the stock has responded well after earnings
releases.
Market Performance &
Technicals
TPX was rallying with the markets since late December. Once
the stock broke above the 50 day moving
average we saw another small run then consolidation into the earnings
report.
After
the gap on earnings, the stock
is again consolidating near it’s yearly high of around $73, which
remains a
major resistance level. Look for support around the $65
dollar level, which is a bottom after the recent gap. Below
that the 200 day moving average of $61
and the 50 day of about $57 will be the next support points.
For
now TPX trends remain bullish
and the stock has exceeded the S&P 500 by over 50% in the past
year and over
15% in the past month.
Jared
A Levy is the Momentum Stock
Strategist for Zacks.com. He is also the Editor in charge of the
market-beating
Zacks
Whisper Trader Service.
This
Week’s Momentum Zacks Rank Buy Stocks:
Cooper
Companies (COO)
We are
in the midst of a major
overhaul in healthcare. In the coming
years, millions more Americans will be receiving care and will need
both
providers of care as well as devices that make care more efficient and
less
costly.
The
Cooper Companies, through its
two business units, CooperVision and CooperSurgical are leading the way
in both
vision and women’s’ healthcare on their own.
They stand to benefit from an increase in customers and heavier use of
their
products in both divisions as the US expands healthcare coverage for
all
Americans.
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(LULU)
Sometimes
the strongest companies are
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not at first. Who would have believed
that a high-end yoga clothing store would have a market cap of 7
billion and
earnings growth
of 50%?
For
most of us, selling Yoga accessories
would be a niche market handled by smaller retailers or as a segment of
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larger company like Nike or Adidas. Lululemon
has managed to not only
ride the wave of Yoga popularity and culture, but to weave themselves
into that
lifestyle with expensive clothes that people can’t seem to get enough
of! (They
are going after runners and dancers as well)
Rackspace
Hosting Inc. (RAX)
There
is a good chance that some
part of your head might just be in the clouds…
Even
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cloud” is all around you. Data and processing
power is moving away from your home and office computer and occurring
offsite. The
cloud is an essential catalyst for the revolution already
underway in communication, (smartphones, tablets, etc) business
tasks and pure efficiency both personally and professionally.
Rackspace
is positioning itself as a
key component of the new cloud revolution.
Their products and services allow businesses and individuals
to expand their virtual data
needs broadly, quickly and affordably.
Foot
Locker (FL)
Usually
you look to the sky when you
are dreaming of bigger and better things. But in this case,
you might
want to
take a look at your shoes! Of course foot locker is more than
just a
shoe
company; I’ll get to that in just a second.
Foot
locker saw a sharp drop-off in
sales when the recession hit, but has since been recovering and seems
to be
gaining momentum here. If you are a believer in the
consumer comeback, you might not need to look further than your own two
feet.
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