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NEW YORK (TheStreet) -- Tempur Sealy International (TPX) has been upgraded by TheStreet Ratings from Hold to Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate TEMPUR SEALY INTL INC (TPX) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, notable return on equity and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 10.4%. Since the same quarter one year prior, revenues rose by 12.5%. 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.
- 40.62% 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 4.48% compares favorably to the industry average.
- TEMPUR SEALY INTL INC's earnings per share declined by 7.7% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over 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 ($2.65 versus $1.27).
- The change in net income from the same quarter one year ago has significantly exceeded that of the Household Durables industry average, but is less than that of the S&P 500. The net income has decreased by 7.7% when compared to the same quarter one year ago, dropping from $40.20 million to $37.10 million.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- You can view the full analysis from the report here: TPX Ratings Report
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