Why Tempur-Pedic Shares Bounced

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.

Don't lose sleep over Tempur-Pedic. Add the stock to your Watchlist to get all the updates.


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  • Report this Comment On January 27, 2013, at 8:15 AM, Sotograndeman wrote:

    "If you wait for the robins, the Spring will be over."

    "You pay a high price for a cheery consensus."

    Warren Buffett

    We should base our buying and selling on valuation. If we wait until the 'all clear' sounds, the price will already have risen.

    TMF tries to give the impression it follows Buffett. But it's sadly a zillion miles away from his philosophy and practices.

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