On Thursday, April 5, mattress and bedding products firm Sealy
- Total revenue grew 4.3% as volumes grew 12.2%. Management focused on lower prices and promotions to sell more goods.
- Net income advanced 7.2% but diluted earnings fell 13.3%, as shares outstanding jumped 26.4%. Sealy's earnings conference call later today should shed light on why shares outstanding increased.
- It might not be time to sleep on Sealy just yet, though. Analysts were surprised by the lower earnings and shrinkage in margins, which caused the stock to fall almost 5% after results were released.
- Free cash flow continued a negative trend, as capital expenditures exceeded cash flow generated from operations.
- Investors aren't sleeping well with Sealy, either, as it carries a lowly one-star rating in the Motley Fool CAPS intelligence database. Rivals Tempur-pedic
(NYSE:TPX) and Select Comfort(NASDAQ:SCSS) carry more favorable four-star ratings. Feel free to offer your opinion on these companies or on any other stock out there.
(Figures in thousands, except per-share data)
Income Statement Highlights
|
Q1 2007 |
Q1 2006 |
Change |
|
|---|---|---|---|
|
Sales |
$412,567 |
$395,735 |
4.3% |
|
Net Profit |
$24,634 |
$22,972 |
7.2% |
|
EPS |
$0.26 |
$0.30 |
(13.3%) |
|
Diluted Shares |
96,585 |
76,386 |
26.4% |
Get back to basics with a look at the income statement.
Margin Checkup
|
Q1 2007 |
Q1 2006 |
Change* |
|
|---|---|---|---|
|
Gross Margin |
42.97% |
44.65% |
(1.68) |
|
Operating Margin |
13.30% |
14.32% |
(1.02) |
|
Net Margin |
5.97% |
5.80% |
0.17 |
Margins are the earnings engine.
Balance Sheet Highlights
|
Assets |
Q1 2007 |
Q1 2006 |
Change |
|---|---|---|---|
|
Cash + ST Invest. |
$31,750 |
$13,760 |
130.7% |
|
Accounts Rec. |
$217,704 |
$203,977 |
6.7% |
|
Inventory |
$65,334 |
$66,485 |
(1.7%) |
|
Liabilities |
Q1 2007 |
Q1 2006 |
Change |
|---|---|---|---|
|
Accounts Payable |
$129,001 |
$110,473 |
16.8% |
|
Long-Term Debt |
$811,756 |
$960,531 |
(15.5%) |
The balance sheet reflects the company's health.
Cash Flow Highlights
|
Q1 2007 |
Q1 2006 |
Change |
|
|---|---|---|---|
|
Cash From Ops. |
$4,253 |
($14,056) |
(130.3%) |
|
Capital Expenditures |
$12,836 |
$5,548 |
131.4% |
|
Free Cash Flow |
($8,583) |
($19,604) |
(56.2%) |
Free cash flow is a Fool's best friend.
Related Foolishness:
- So Which Stocks Should I Buy Now?
- Time to Sleep on Sealy?
- 70 Times Better Than the Next Microsoft
- The Best Small Cap for 2007: Tempur-Pedic
Select Comfort is a four-time Motley Fool Hidden Gems recommendation. To see how this and other small-cap gems from Tom Gardner and Bill Mann can help you sleep better at night, while you know your portfolio is growing, sign up for a free trial.
Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.
Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.
