Back to top

Image: Bigstock

Higher Brand Sales Hold Key to Tempur's (TPX) Q4 Earnings

Read MoreHide Full Article

Tempur Sealy International, Inc. (TPX - Free Report) is slated to report fourth-quarter 2019 results on Feb 13, before the opening bell.

In the last reported quarter, the company’s adjusted earnings of $1.30 per share beat the Zacks Consensus Estimate by 15% and revenues of $821 million outpaced the same by 3.3%. On a year-over-year basis, adjusted earnings advanced 27.5% and revenues grew 12.5% in the quarter, led by robust sales growth across geographies, brands and price points.

Trend in Estimate Revision

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has increased 0.8% to $1.19 per share over the past 30 days. This indicates a 32.2% jump from the year-ago earnings of 90 cents per share. The consensus mark for revenues is $775.3 million, suggesting a 14.7% year-over-year improvement.

Factors to Note

Tempur’s fourth-quarter revenues are likely to have witnessed double-digit growth, driven by solid contribution from both its segments — North America and International. Overall, the company’s top line is likely to have gained from top-quality products, very strong brands and broadening distribution. Retailers have been giving increased preference to Tempur’s portfolio of products, courtesy of the company’s focus on internal initiatives to deliver finest quality products, and highest level of manufacturing reliability and customer service. This has been driving its top-line growth over the last few quarters.

The company has been navigating regional economic uncertainty and taking advantage of the changing bedding market over the last few quarters. Its new relationship with Big Lots, Mattress Firm and Better Bed is expected to reflect on fourth-quarter results. The company expects to benefit from new distribution in both Tempur-Pedic and Sealy brands in the fourth quarter.

Segment-wise, the consensus estimate for the North America segment’s net sales is pegged at $617 million, indicating an improvement of 16.9% from the year-ago reported figure but a 9.5% sequential decline. The segment has been benefiting from higher sales through wholesale and direct channels, backed by growth from company-owned stores, and the acquisition of Sleep Outfitters.

The consensus mark for revenues from the International segment is pegged at $149 million, suggesting no change from the year-ago quarter but a 7.2% improvement from the third quarter.

Indeed, the company has been experiencing a high degree of market uncertainty in the U.K., France, Hong Kong and China, along with choppy business conditions. Despite these unfavorable conditions, the international segment has been delivering solid performance led by robust contribution from the direct channel.

The company’s bottom line is also expected to have increased in double digits, driven by Tempur merchandising mix, pricing benefits and lower commodity costs.

What Our Model Indicates

Our proven model predicts an earnings beat for Tempur this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: It has an Earnings ESP of +0.94%.

Zacks Rank: The company currently carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks Worth a Look

Here are some other companies in the Zacks Retail-Wholesale sector, which according to our model have the right combination of elements to post an earnings beat in their respective quarters to be reported.

Builders FirstSource, Inc. (BLDR - Free Report) has an Earnings ESP of +1.45% and carries a Zacks Rank #1.

BMC Stock Holdings, Inc. has an Earnings ESP of +11.10% and carries a Zacks Rank #2.

BJ's Restaurants, Inc. (BJRI - Free Report) has an Earnings ESP of +3.93% and holds a Zacks Rank #3.

Zacks Top 10 Stocks for 2020

In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?

Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.

Access Zacks Top 10 Stocks for 2020 today >>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


BJ's Restaurants, Inc. (BJRI) - free report >>

Builders FirstSource, Inc. (BLDR) - free report >>

Tempur Sealy International, Inc. (TPX) - free report >>

Published in