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 sleep specialist Tempur-Pedic (TPX 0.51%) woke up on the wrong side of the bed today after a nightmarish earnings report sent the stock plummeting as much as 23%.

So what: The mattress maker cut its 2012 EPS forecast from $2.80 to $2.55 and trimmed revenue projections from $1.43 billion to $1.4 billion on overall weakness. Adjusted EPS of $0.70 actually beat estimates by a penny, but that was far from last year's $0.90 per share in profit. Revenue declined 9% to $347.9 million, and mattress sales in North America decreased by 15% in the quarter as competition ate into its market leadership. CEO Mark Sarvary said, "Changes in the competitive environment that we experienced during the second quarter in North America continue to have an adverse impact on our third quarter performance."

Now what: Tempur-Pedic shares have been decimated over the last six months, falling 70% since April amid slowing sales and competitive concerns. At a P/E of eight, this stock might look cheap, but investors would be better off waiting for positive sales growth before jumping on board. Tempur-Pedic's acquisition of Sealy (NYSE: ZZ) last month also seems a further sign that this growth engine has run its course. Investors will want to keep an eye on the effects of the Sealy deal, which is expected to close in the first half of next year.

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