Today's Water-Logged And Getting Wetter Stock: Tempur Sealy International (TPX)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Tempur Sealy International ( TPX) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Tempur Sealy International as such a stock due to the following factors:

  • TPX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $36.1 million.
  • TPX has traded 1.1 million shares today.
  • TPX traded in a range 232.3% of the normal price range with a price range of $2.92.
  • TPX traded below its daily resistance level (quality: 20 days, meaning that the stock is crossing a resistance level set by the last 20 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on TPX:

Tempur Sealy International, Inc. engages in the manufacture, marketing, and distribution of bedding products in North America and internationally. The company offers mattresses, pillows, and adjustable bed bases, as well as various cushions and other comfort products. The stock currently has a dividend yield of 4.1%. TPX has a PE ratio of 44.6. Currently there are 3 analysts that rate Tempur Sealy International a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for Tempur Sealy International has been 1.3 million shares per day over the past 30 days. Tempur Sealy International has a market cap of $3.3 billion and is part of the consumer goods sector and consumer durables industry. The stock has a beta of 2.20 and a short float of 17.5% with 10.30 days to cover. Shares are up 0.8% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Tempur Sealy International as a hold. The company's strengths can be seen in multiple areas, such as its notable return on equity, robust revenue growth and increase in net income. However, as a counter to these strengths, we also find weaknesses including premium valuation and generally higher debt management risk.

Highlights from the ratings report include:
  • Compared to other companies in the Household Durables industry and the overall market, TEMPUR SEALY INTL INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • TPX's very impressive revenue growth greatly exceeded the industry average of 29.7%. Since the same quarter one year prior, revenues leaped by 111.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • TEMPUR SEALY INTL INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TEMPUR SEALY INTL INC reported lower earnings of $1.67 versus $3.18 in the prior year. This year, the market expects an improvement in earnings ($2.34 versus $1.67).
  • The debt-to-equity ratio is very high at 22.55 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, TPX's quick ratio is somewhat strong at 1.00, demonstrating the ability to handle short-term liquidity needs.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
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