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. NEW YORK ( TheStreet) -- Tempur Sealy International (NYSE: TPX) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income, solid stock price performance, impressive record of earnings per share growth and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow.
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- TPX's very impressive revenue growth greatly exceeded the industry average of 17.3%. Since the same quarter one year prior, revenues leaped by 79.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Household Durables industry. The net income increased by 119.2% when compared to the same quarter one year prior, rising from $12.50 million to $27.40 million.
- Powered by its strong earnings growth of 120.00% and other important driving factors, this stock has surged by 33.94% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- 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 $1.27 versus $1.67 in the prior year. This year, the market expects an improvement in earnings ($2.77 versus $1.27).
- 41.23% is the gross profit margin for TEMPUR SEALY INTL INC which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, TPX's net profit margin of 3.90% compares favorably to the industry average.