NEW YORK (TheStreet) -- Piper Jaffray upgraded Tempur Sealy (TPX) to "overweight" from "neutral" on Tuesday and set a $56 target price. The firm noted Europe and North America appear poised to accelerate.
The stock was rising 3.51% to $49.82 shortly after the market opened on Tuesday.
Separately, TheStreet Ratings team rates TEMPUR SEALY INTL INC as a "hold" with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate TEMPUR SEALY INTL INC (TPX) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- TPX's very impressive revenue growth greatly exceeded the industry average of 29.1%. Since the same quarter one year prior, revenues leaped by 98.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- 43.50% is the gross profit margin for TEMPUR SEALY INTL INC which we consider to be strong. Regardless of TPX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 3.37% trails the industry average.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. 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.
- The debt-to-equity ratio is very high at 16.11 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, TPX maintains a poor quick ratio of 0.97, which illustrates the inability to avoid short-term cash problems.
- Net operating cash flow has significantly decreased to -$6.30 million or 117.40% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: TPX Ratings Report