Tempur Pedic International, Inc. (TPX) has rallied in a big way in October, gaining more than 50% after jumping from $46 to $70. The company’s recent earnings surprise and a bullish growth projection should continue to provide momentum for this Zacks #1 Rank stock.
Company Description
Tempur Pedic International manufactures and sells beds and bedding products in North America and internationally. The company was founded in 1989 and has a market cap of $4.65 billion.
With earnings season under way, TPX reported strong Q3 results on October 20 that came ahead of expectations.
Third-Quarter Results
Revenue for the period was up 30% from last year to $383 million. Earnings also came in strong at 90 cents, 6% ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 11% over the last four quarters.
The good quarter was led by mattress sales, up 28% globally from last year. International mattress sales were up 31%.
Margins were also on the upswing, with gross margin climbing to 52.4% from 51% last year.
Tempur Pedic was also busy returning value to shareholders, buying back 1.34 million shares of common stocks for a total of $80 million. It’s total repurchases on the year now stand at $240 million, with $200 million left under its current authorization program.
Estimates
We’ve seen a little movement in estimates off the good quarter, with the current year adding 3 cents to $3.16. The next-year estimate is pegged at $3.77, a bullish 19% growth projection.
With a PEG ratio of 1.10, TPX trades at a premium to the benchmark of 1 for value.
1-Month Chart
On the chart, shares took a tumble with the market in September, but have since regained most of that lost ground. Take a look below.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Whisper Trader Service.
