On Thursday, Feb. 6, Tempur Sealy International (TPX -0.30%) is due to report earnings for the fourth quarter of its 2013 fiscal year. Heading into earnings, investors are right to evaluate the company's prospects and determine whether there is too much risk to hold the stock or, on the other hand, whether now is an ample opportunity to jump in. In an attempt to clarify what Mr. Market is expecting and what the state of Tempur Sealy's financials is, I delved into its historical performance and compared it to peers Select Comfort (SNBR -1.77%) and Mattress Firm Holding (NASDAQ: MFRM).

Mr. Market lacks enthusiasm for Tempur Sealy
For the quarter, analysts expect the company to report earnings per share of $0.63. If accurate, this would amount to a mere 5% gain compared to the $0.60 the company earned during the same quarter a year earlier. For the entire fiscal year, the situation is a little more demanding.

During 2012, Tempur Sealy (at the time, Tempur-Pedic, because it had yet to acquire Sealy) reported earnings per share of $1.70, derived from net income of $106.8 million. For the company's 2013 fiscal year, that number is expected to fall 14% to $1.46 per share. However, after assuming the impact of one-time expenses, some of which are attributable to the acquisition of Sealy, analysts expect the company's earnings per share to come in at $2.34 compared to the $2.61 reported in the prior year.

Interestingly, none of this expected decline will likely come from the company's Sealy operations. For the first three quarters of 2013, pre-tax income for Tempur Sealy's Sealy segment came out to $40.4 million while its Tempur North America segment saw its profitability decline by $145.7 million. Unless a drastic reversal is experienced, it's unlikely that the company's bottom line will be anything but helped by the Sealy acquisition. 

A precursor to disaster?
One fear for investors as earnings approach is how a company's peers are performing. The rationale underlying this fear is that how a competitor performs could be indicative of a general trend in that industry. Heading into earnings, this is of particular concern for investors in Tempur Sealy, because the preliminary earnings that rival Select Comfort reported earlier this month were far from ideal.

For the quarter, Select Comfort brought in revenue of $231 million. While this represented a nearly 5% rise over the $220.6 million the company reported the same quarter a year earlier, it was shy of the $242.6 million analysts expected. Despite having a strong quarter, the company experienced lackluster sales that began with Cyber Monday and extended through the end of December.

On an earnings basis, Select Comfort previously believed that it would bring in $0.18 to $0.26 per share for the quarter. In its preliminary release, management stated that it will likely report somewhere in the lower range of its expectations because of the revenue shortfall. This could provide some headwind for Tempur Sealy heading into its results and could imply lower future expectations for it and other competitors like Mattress Firm.

But how does Tempur Sealy stack up in the long run?
Over the past four years, Tempur Sealy has demonstrated a strong capacity to grow. Between 2009 and 2012, the company's revenue rose 69%, from $831.2 million to $1.4 billion. In this time frame, it saw its net income rise 26% as revenue rose but was offset to some extent by rising costs.

At first glance, this kind of growth rate looks great (and it is!) but the company's performance is actually the lowest of its peer group. Select Comfort, for instance, grew slightly faster over this time horizon, increasing its revenue by 72%. Unlike Tempur Sealy, though, the business was able to keep costs depressed. In that four-year time span, the company's net income rose 119%, from $35.6 million to $78.1 million.

Mattress Firm's performance was even better. Between 2009 and 2012, Mattress Firm saw its revenue jump 133%, from $434.4 million to $1 billion. Not only did its top-line performance leave its peers in the dust, it's profitability did, too. Over this time frame, the company saw its net income rise from negative $4.7 million to $39.9 million as it benefited from rising sales and greater cost efficiencies.

Foolish takeaway
Heading into its fourth-quarter report, analysts aren't terribly enthusiastic about Tempur Sealy's prospects. While it is possible that the company could surprise and send shares soaring, it's not wise to gamble on a company's earnings release. Rather, the Foolish investor would be wise to assess the value of each of these companies and determine which is likely to offer the best long-term prospects.

At a brief glance, Mattress Firm's growth looks like it could create amazing value in the long run, but the 8% net profit margin generated by Select Comfort is slightly higher than Tempur Sealy's and more than twice what Mattress Firm can deliver. Using this logic, combined with the fact that Select Comfort is trading at half the P/E ratio of Mattress Firm and one-third that of Tempur Sealy, makes Select Comfort a difficult company to pass up.