Aggressive Growth: Tempur-Pedic International (TPX)

Tempur-Pedic International Inc. (TPX) just topped Wall Street’s expectations, which should push estimates higher.

Company Description

Tempur-Pedic makes mattresses and pillows from the company’s proprietary material. The company markets through department stores, the internet, healthcare markets and specialty retailers.

Beat the Street

On Jul 20 Tempur-Pedic posted another earnings surprise, the ninth in a row for the company. Even with consumers shying away from many purchases, Tempur-Pedic continues to improve.

Sales for the second quarter came in at a better-than-expected $263 million, up 42%. Net income nearly doubled to $33.5 million, from $16.9 million. Earnings per share broke down to 46 cents per share, a nickel ahead of the Zacks Consensus Estimate.

Guiding Higher

In the same announcement, Tempur-Pedic raised its full-year revenue forecast to between $1.06 billion and $1.1 billion. The previous estimate called for $1.2 billion to $1.06 billion.

Tempur-Pedic also raised its earnings estimate. EPS for the year is expected to land between $1.85 and $2.00, after each end of the range was raised 15 cents.

We have not received new estimates from analysts yet, but given the revisions prior to the report and the actual results; I can only assume they will be higher.

Valuations

Shares are trading with decent, not good, valuations, but that should change once new estimates start rolling in. Currently TPX is going for 17 times forward earnings and with a PEG of 1.2. Tempur-Pedic analysts were expecting growth rates of 68% this year and 17% next year, prior to the earnings news.

The Chart

TPX has been in a fairly wide, but well defined range over the past few months. However, if we see strong enough estimate revisions, that could be the catalyst that propels the stock higher.

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