Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Tempur-Pedic International (NYSE: TPX ) woke up on the right side of the bed today, climbing as much as 13% after posting better-than-expected quarterly earnings.
So what: Though adjusted profits dropped from $0.84 per share in the quarter from a year ago, at $0.60 they were still better than the $0.55 analysts expected. Revenue dropped 7% in the quarter but still beat estimates, and North American sales were particularly weak declining by 9%. Guidance for 2013 was lighter than expected at $2.55 versus the $2.73 the Street had projected.
Now what: Tempur-Pedic is on the process of acquiring Sealy (NYSE: ZZ ) , which also beat estimates this quarter, but acquisition costs were a major reason for the drop in profits over a year ago. Tempur-Pedic expects the deal to be complete in the first half of the year. The mattress maker has had a roller coaster year, with its stock up 60% from a few months ago, but still only half of where it was in April. The mattress market is highly competitive, and Tempur-Pedic's declining revenue is a concern. I'd wait for sales to head north before I got on board.
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