On Feb 12, 2015, Zacks Investment Research upgraded Select Comfort Corporation (SCSS), by a notch to a Zacks Rank #1 (Strong Buy). Shares of this retailer of bedding products hit a 52-week high of $32.95 yesterday, and has surged 18% year-to-date.
Why the Upgrade?
Driven by positive consumer response to both core product line and new innovations, Select Comfort posted solid fourth-quarter 2014 results, wherein both top and bottom lines grew year over year.
Adjusted earnings of 31 cents per share increased over twofold from the year-ago quarter and also came ahead of the Zacks Consensus Estimate of 23 cents.
Net sales also soared 40% year over year to $322.2 million, exceeding the Zacks Consensus Estimate of $284 million. Moreover, comparable-store sales in the quarter increased 22% on a year-over-year basis.
The company’s results mainly benefited from its strategy focused on product innovations like SleepIQ technology, successful marketing campaign and exclusive distribution.
Additionally, Select Comfort delivered positive surprises in three of the trailing four quarters, with an average beat of 14.8%, including a positive surprise of 34.8% in the quarter under review.
Following the strong fourth quarter performance, Select Comfort initiated its outlook for 2015. The company expects full-year earnings to be $1.30 per share, which includes 13 cents for Enterprise Resource Planning launch cost. Moreover, management projects high-single digit growth in total net sales.
The company also established its long-term goal to more than double its EPS from the 2014 level to $2.75 by fiscal 2019.
Further, the company’s consumer driven innovation strategy, balanced and disciplined approach of its business and capital deployment initiatives will lead to positive long-term return for the shareholders.
Zacks Rank
Other stocks worth considering include Build-A-Bear Workshop Inc. (BBW), CST Brands, Inc. (CST) and Marinemax Inc. (HZO). All carrying the same Zacks Rank as Select Comfort.
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