Why Tempur Sealy Shares Collapsed

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

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 Sealy International (NYSE: TPX  ) were getting squashed today, falling as much as 13% after delivering a disappointing second-quarter earnings report.

So what: The recently merged mattress maker said revenue doubled, thanks to the addition of Sealy, hitting $660.6 million, but that missed the Street's forecast at $662.8 million. Earnings per share also came up short at $0.36, against expectations of $0.40. Even worse, the company lowered its full-year EPS guidance to $2.25-$2.40 from $2.43-$2.45, as management said it's "taking longer than expected" to return the company to growth following the acquisition. Sales from continuing operations dropped 4.9% in the quarter.

Now what: The acquisition of Sealy was supposed to re-energize the company, but management still sees sales at the legacy Tempur North America falling 5% to 10%. The mattress industry may be due for further consolidation following the merger, as several players are competing for what appears to be a shrinking pie. Tempur-Pedic once dominated the market with its Memoryfoam mattress, but rivals have caught up in recent quarters. I'd approach the entire industry with caution, especially Tempur Sealy, which has now missed estimates several times of late.

Millions of Americans have waited on the sidelines since the market meltdown in 2008 and 2009, too scared to invest and put their money at further risk. Yet, those who've stayed out of the market have missed out on huge gains, and put their financial futures in jeopardy. In our brand-new special report, "Your Essential Guide to Start Investing Today," The Motley Fool's personal finance experts show you why investing is so important, and what you need to do to get started. Click here to get your copy today -- it's absolutely free.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2562635, ~/Articles/ArticleHandler.aspx, 9/27/2016 5:13:53 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 7 hours ago Sponsored by:
DOW 18,094.83 -166.62 -0.91%
S&P 500 2,146.10 -18.59 -0.86%
NASD 5,257.49 -48.26 -0.91%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/26/2016 4:02 PM
TPX $74.50 Down -1.97 -2.58%
Tempur Sealy Inter… CAPS Rating: ***