The year is nearing its end, and now's a good opportunity to look at what happened throughout 2012 to the stocks you follow. If you know the important things that a company achieved, as well as any challenges it failed to overcome, then you can make a better decision about whether it really deserves a spot in your portfolio.
Today, I'll look at Tempur-Pedic (NYSE: TPX ) . As a premium mattress maker, Tempur-Pedic relies on a solid economy to support sales. Yet even though the economic recovery slowly improved throughout the year, the gains didn't come fast enough for Tempur-Pedic, which suffered a big plunge early in the year. Read on to find out more about what moved shares of Tempur-Pedic this year.
Stats on Tempur-Pedic
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Year-to-date stock return
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(41.6%)
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Market cap
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$1.83 billion
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Revenue, past 12 months
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$1.43 billion
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Net Income, past 12 months
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$140 million
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1-year revenue growth
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6.3%
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1-year net income growth
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(33.4%)
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CAPS rating (out of 5)
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****
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Source: S&P Capital IQ.
Can Tempur-Pedic finally wake up?
Tempur-Pedic has had problems throughout 2012. In early June, the stock lost about half its value when it said that its full-year earnings would come in almost a third below where analysts had expected, with a corresponding revenue shortfall as well. Then in October, the stock lost nearly a quarter of its value when it cut its 2012 guidance again. International sales have been somewhat of a bright spot at various points during the year, but slow North American sales have definitely held Tempur-Pedic back.
The problems weren't unique to Tempur-Pedic, though. Once-hot 2011 IPO Mattress Firm (NASDAQ: MFRM ) has given investors similarly sleepless nights, having lost half its value since its April highs as sales throughout the industry have been disappointing. Select Comfort (NASDAQ: SCSS ) has held up somewhat better, although even it has given investors some concerns about future guidance.
Tempur-Pedic has taken advantage of low prices throughout the industry to make some strategic moves. In September, Tempur-Pedic announced that it would buy Sealy (NYSE: ZZ ) for $242 million in cash. Including assumption of debt, the total deal price tag rose to about $1.3 billion.
Tempur-Pedic sports a relatively cheap valuation at 11 times forward earnings. For the company to make investors comfortable again, Tempur-Pedic will need to demonstrate it can get back into growth mode as an economic recovery takes firmer hold over the nation.
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