NEW YORK (TheStreet) -- Tempur Sealy (TPX) shares are climbing, up 1.9% to $51.50, in after-market trading on Thursday following the release of the company's first quarter earnings results.
Total net sales for the company increased 80% from the year ago period to $701.9 million, beating analysts estimates of $683.3 million.
The worlds largest bedding provider reported adjusted net income of $38.2 million, or 53 cents per diluted share, beating analysts estimates by 1 cent.
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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, growth in earnings per share and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, weak operating cash flow and relatively poor performance when compared with the S&P 500 during the past year."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- TPX's very impressive revenue growth greatly exceeded the industry average of 26.8%. Since the same quarter one year prior, revenues leaped by 98.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- TEMPUR SEALY INTL INC has improved earnings per share by 15.4% 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 $1.27 versus $1.67 in the prior year. This year, the market expects an improvement in earnings ($2.77 versus $1.27).
- 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, TPX's net profit margin of 4.05% compares favorably to the industry average.
- 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.
- The debt-to-equity ratio is very high at 15.48 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.
- You can view the full analysis from the report here: TPX Ratings Reports