Tag Archives: Select Comfort

Business, Finance, Occupation & Industry

Is Select Comfort's Stock Destined for Greatness?

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By Alex Planes, The Motley Fool

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Investors love stocks that consistently beat the Street without getting ahead of their fundamentals and risking a meltdown. The best stocks offer sustainable market-beating gains, with robust and improving financial metrics that support strong price growth. Does Select Comfort fit the bill? Let’s take a look at what its recent results tell us about its potential for future gains.

What we’re looking for
The graphs you’re about to see tell Select Comfort‘s story, and we’ll be grading the quality of that story in several ways:

  • Growth: Are profits, margins, and free cash flow all increasing?
  • Valuation: Is share price growing in line with earnings per share?
  • Opportunities: Is return on equity increasing while debt to equity declines?
  • Dividends: Are dividends consistently growing in a sustainable way?

What the numbers tell you
Now, let’s take a look at Select Comfort‘s key statistics:

Source: SCSS Total Return Price data by YCharts.

Passing Criteria

3-Year* Change 

Grade

Revenue growth > 30%

71.8%

Pass

Improving profit margin

(78.1%)

Fail

Free cash flow growth > Net income growth

(19.2%) vs. 119.7%

Fail

Improving EPS

77.9%

Pass

Stock growth (+ 15%) < EPS growth

183.7% vs. 77.9%

Fail

Source: YCharts. * Period begins at end of Q4 2009.

Source: SCSS Return on Equity data by YCharts.

Passing Criteria

3-Year* Change

Grade

Improving return on equity

(41.8%) **

Fail

Declining debt to equity

(100%)

Pass

Source: YCharts. * Period begins at end of Q4 2009.
** Begins at Q4 2010 due to abnormally high starting value in 2009.

How we got here and where we’re going
Despite significant growth on some metrics, Select Comfort‘s had a hard time justifying its share price of late — which may explain why shares have fallen so far in the past few months. At three of seven passing grades, Select Comfort‘s performance definitely leaves room for improvement. For curious investors, the question is: will that improvement happen in 2013? If not now, when?

Select Comfort‘s been tossing and turning uncomfortably all year. Its latest agony, which arrived last month, warned of a short-term sales weakness that resulted in big profit target cuts on Wall Street. Despite the worry, Select Comfort‘s forward P/E is an even 10  as of this writing, and could easily slip into single digits on one underwhelming day. Keep in mind, also, that the average $1.85 price target cited last month is still a 35% increase over 2012’s result.

That makes Select Comfort, surprisingly, the best bargain by far in the shrinking mattress segment. An acquisition last year left only Tempur-Pedic and Mattress Firm remaining to contend with Select Comfort, and at present both have P/E’s more than twice as high as that of the maker of Sleep Number beds. This is a bit surprising, as the last time I examined Tempur-Pedic, it was the best value, and part of that rationale was that its growth rates were reportedly lower than Select Comfort‘s. …read more

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Why Mattress Firm Shares Jumped

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By Jeremy Bowman, The Motley Fool

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Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on big changes — just in case they’re material to our investing thesis.

What: Shares of Mattress Firm Holding were springing higher today, gaining as much as 13% after providing promising 2013 guidance in its quarterly report.

So what: Despite today’s gain, It wasn’t exactly a great quarter for Mattress Firm. Adjusted earnings per share fell from $0.56 to $0.30, and although revenue grew 37% in the quarter, that growth came entirely from new and acquired stores as same-store sales fell by 1.6%. The results missed expectations on both top and bottom lines. EPS guidance of $1.90 to $1.98 for 2013 was within range of estimates, while revenue guidance of $1.24 to $1.25 billion was ahead by about 3%.

Now what: The earnings report won Mattress Firm an upgrade from The Street from sell to hold based on strong revenue growth and solid return on equity, and Raymond James also upgraded the stock to “outperform” from “market perform.” Citigroup noted that sales could increase by more than expected as mattress prices continue to go up. The upside revenue guidance was enough to bring shares of industry rivals Tempur-Pedic and Select Comfort up significantly. Still, I’d remain wary of these companies, as the industry is extremely competitive and the durable nature of mattresses means that any meaningful innovation is likely to be copied before it reaches most consumers.

Don’t miss the next update on Mattress Firm. Add the stock to your Watchlist by clicking right here.

The article Why Mattress Firm Shares Jumped originally appeared on Fool.com.

Fool contributor Jeremy Bowman has no position in any stocks mentioned. The Motley Fool owns shares of Citigroup and Tempur-Pedic International. Try any of our Foolish newsletter services free for 30 days. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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Business, Finance, Occupation & Industry

Mattress Firm Earnings: An Early Look

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By Dan Caplinger, The Motley Fool

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Earnings season is just about over, with almost all companies already having reported their quarterly results. But there are still a few companies left to report, and Mattress Firm is about to release its quarterly earnings report.

The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they’ll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you’ll be less likely to make an uninformed, knee-jerk reaction to news that turns out to be exactly the wrong move.

Few businesses sound simpler than selling mattresses, but Mattress Firm burst onto the scene in late 2011 to plenty of hoopla and immediate share-price gains. Since then, though, the business has cooled off. Let’s take an early look at what’s been happening with Mattress Firm over the past quarter and what we’re likely to see in its quarterly report on Tuesday.

Stats on Mattress Firm

 

  

Analyst EPS Estimate

$0.32

Change From Year-Ago EPS

(49%)

Revenue Estimate

$261.5 million

Change From Year-Ago Revenue

39%

Earnings Beats in Past 4 Quarters

4

Source: Yahoo! Finance.

Will Mattress Firm stay solid this quarter?
Over the past few months, analysts haven’t budged on their calls for Mattress Firm‘s earnings, either for the just-ended quarter or for the fiscal 2014 year. The stock, though, has moved sharply higher, rising nearly 30% since mid-December.

Mattress Firm came public during a time of huge growth for the mattress industry. But after timing its IPO to perfection, Mattress Firm and its industry peers ran into tough times. Rival Tempur-Pedic lost nearly half its value in a single day last June after slashing its earnings guidance by nearly a third. Select Comfort followed suit shortly thereafter with its own troubles, although its stock didn’t fall as much as Tempur-Pedic’s did because its business held up somewhat better. Even as recently as December, Mattress Firm cited weak conditions in cutting back on its outlook for the full 2013 fiscal year.

Since then, though, improving conditions in the economy could spell relief for Mattress Firm and its peers. Tempur-Pedic decided last September to gain exposure to the lower end of the mattress market by buying Sealy. From a macroeconomic perspective, an improving housing market traditionally has boded well for furniture and mattress companies that cater to new homeowners seeking to furnish their homes, and housing has definitely been on the upswing lately.

Just yesterday, Mattress Firm got an upgrade from analyst Stifel Nicolaus, which cited the weak conditions from early 2012 as providing easy comparisons that the mattress seller can use to show accelerating growth. At the same time, by keeping expectations relatively low, Mattress Firm‘s management could be setting itself up for positive news and an earnings beat that’s consistent with its past quarters.

In its quarterly report, watch for …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

This Week's 5 Dumbest Stock Moves

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By Rick Aristotle Munarriz, The Motley Fool

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Stupidity is contagious. It gets us all from time to time. Even respectable companies can catch it. As I do every week, let’s take a look at five dumb financial events this week that may make your head spin.

1. I think Icahn
Carl Icahn didn’t become a billionaire by making dumb mistakes, but his move to rattle the cage at Dell has all the makings of a disaster.

Dell received a $24.2 billion offer to take the company private last month, but Icahn feels that the buyout price of $13.65 a share is too low.

Simply being unhappy isn’t enough for Icahn, obviously. He’s an activist at heart, so he’s taken a stake in the fading PC maker and threatening “years of litigation” if he doesn’t get his way.

What’s his plan? Well, no one has offered to top the $24.2 billion offer, but Icahn is proposing — if the deal doesn’t pass — for Dell to pay a special dividend of $9 a share. Dell obviously doesn’t have that kind of money, so it would have to take on new debt to make it happen.

Really?

Dell’s behind the times, and it’s too late in a world that has eased up on PCs over the past two years. Analysts see revenue slipping again this year, with profitability taking an even bigger hit. Taking on more debt is the last thing that Dell needs right now.

2. Fumbling away an opportunity
DIRECTV may not realize that its exclusive deal with the NFL to air every regular season game in its entirety is perhaps the only reason why it’s able to command such a lofty premium over rival satellite television and most cable providers.

Speaking at Deutsche Bank Media, Internet & Telecom Conference in Florida this week, DIRECTV CFO Pat Doyle — as retold in Hollywood Reporter — said that the company is weighing changes to its NFL Sunday Ticket when it comes up for renewal.

The NFL is likely to command a princely ransom when the current deal expires in 2015, and Doyle said that the satellite television giant is considering striking a cheaper non-exclusive deal with the football league or dropping the package altogether.

Yikes. Maybe Doyle is merely negotiating in public, but at a time when live sports programming is about the only thing keeping many homes from cutting the cord with pay TV providers, it would be a devastating blow for DIRECTV to lose the one thing that sets it apart from everybody else.

3. Letting the bed bugs bite
In a week when the market was rallying to fresh all-time heights, shares of Select Comfort hit a new 52-week low after posting a disappointing sales update.

The company behind the Sleep Number air-chambered mattress warned that sales have been soft since the beginning of last month. Unlike its beds, there’s little that Select Comfort can do to adjust that firmness.

“We believe this is a short-term issue associated …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

4 Stocks Making Moves

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By Chris Hill, The Motley Fool

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The following video is from Monday’s Investor Beat, in which host Chris Hill and analysts Matt Argersinger and Jason Moser dissect the hardest-hitting investing stories of the day.

Stratasys loses money for the fourth quarter but shares of the 3-D printing business rise. Oil rig operator Transocean reports higher quarterly revenues. Shares of Apple hit a new 52-week low. And Select Comfort causes some serious discomfort with its latest earnings.

There’s no doubt that Apple is at the center of technology’s largest revolution ever, and that longtime shareholders have been handsomely rewarded with over 1,000% gains. However, after the company’s enormous backslide since September, there is a debate raging as to whether Apple remains a buy. The Motley Fool’s senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.

var FoolAnalyticsData = FoolAnalyticsData || []; FoolAnalyticsData.push({ eventType: “TickerReportPitch”, contentByline: “Chris Hill“, contentId: “cms.21347”, contentTickers: “NASDAQ:AAPL, NYSE:RIG, NASDAQ:SCSS, NASDAQ:SSYS”, contentTitle: “4 Stocks Making Moves”, hasVideo: “True”, pitchId: “1”, …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

These Stocks Sent the Dow Lower This Afternoon

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By Dan Caplinger, The Motley Fool

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The biggest question facing the stock market lately has been whether economic growth will take hold in the U.S. and around the world. When good news has come out, such as the positive U.S. housing data that we’ve seen in recent weeks, markets have rallied. But today, as the tension in Europe and China‘s steps to rein in excesses in its property market add to the domestic pressure of the sequester, investors appear to be less excited about the market‘s prospects. As of 12:55 a.m. EST, the Dow Jones Industrials are down 45 points, or 0.32%.

Within the Dow, economically sensitive stocks top the list of losers. Caterpillar has fallen the most, but United Technologies and Alcoa have also suffered losses of more than 1%. United Tech announced some troubling news: Its Pratt & Whitney division says it has found evidence of fraudulent tests of jet engines at a different business unit under the United Tech corporate umbrella. With aircraft safety concerns having gotten a lot of attention lately, the news raises further questions about the industry’s commitment to safety.

Meanwhile, Alcoa was noted in a New York Times article about private activity bonds, which are municipal bonds that private companies are allowed to tap. As the federal government looks for more tax revenue, such incentives may be first on the chopping block.

Beyond the Dow, Select Comfort has plunged more than 16% after saying it would miss its internal goals for the first quarter, even though it doesn’t provide formal guidance as such. With mattress makers having benefited from optimism about a recovering housing market, Select Comfort‘s news was far from welcome.

Finally, Hecla Mining has sunk 13% after agreeing to buy gold miner Aurizon for $774 million. Gold-mining stocks have been hit hard, arguably making this a strong environment for acquisition activity, but investors appear to think that getting involved in what could become a bidding war for Aurizon isn’t the best move for Hecla to make.

After its drop today, is Alcoa finally worth a closer look? Learn more about how Alcoa plans to rebound from its long slump by reading our premium research report on the stock today. For a Foolish investment perspective on this global giant from our top analysts, simply click here to get started.

var FoolAnalyticsData = FoolAnalyticsData || []; FoolAnalyticsData.push({ …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Why Select Comfort Shares Sank

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By Brian D. Pacampara, The Motley Fool

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Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on big changes — just in case they’re material to our investing thesis.

What: Shares of Select Comfort plummeted 15% today after the specialty mattress retailer warned that it experienced worse-than-expected sales in February.

So what: The disappointing news reinforces serious concerns over the headwinds facing Select Comfort and its growth prospects going forward. While the company is certainly healthier than it was a few years ago, still-subdued consumer spending, coupled with increasingly intense competition from the likes of Mattress Firm Holding and Tempur-Pedic International , continues to weigh heavily on results.

Now what: Due to the weakness in February, management thinks it will likely miss its internal goals for the first quarter. “We believe this is a short-term issue associated with accelerated changes made to our media-buying strategy, and we are making the necessary corrections to both media buying and near-term expenses,” said CEO Shelly Ibach. “We remain confident in our growth formula and are committed to our strategy of delivering an unparalleled sleep experience for our customers.” With the stock hitting a new 52-week low today and trading at a forward P/E of 8, buying into that turnaround talk might even be worth considering.

Interested in more info Select Comfort? Add it to your watchlist.

The article Why Select Comfort Shares Sank originally appeared on Fool.com.

Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool owns shares of Tempur-Pedic International. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Select Comfort Provides Business Performance Update

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By Business Wirevia The Motley Fool

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Select Comfort Provides Business Performance Update

MINNEAPOLIS–(BUSINESS WIRE)– Select Comfort Corporation (NAS: SCSS) today reported it has experienced below-plan sales since Feb. 1, 2013 and will likely miss its internal goals for the first quarter.

“We believe this is a short-term issue associated with accelerated changes made to our media-buying strategy, and we are making the necessary corrections to both media buying and near-term expenses,” said Shelly Ibach, president and CEO, Select Comfort. “We remain confident in our growth formula and are committed to our strategy of delivering an unparalleled sleep experience for our customers.”

The company plans to discuss its outlook for the balance of the year following the release of first-quarter financial results scheduled for April 17, 2013. The company does not provide quarterly financial guidance and does not plan to provide additional commentary regarding first-quarter sales or earnings performance prior to April 17, 2013.

About Select Comfort Corporation

Select Comfort Corporation is leading the industry in delivering an unparalleled sleep experience by offering consumers high-quality, innovative and individualized sleep solutions and services, which include a complete line of SLEEP NUMBER® beds and bedding. The company is the exclusive manufacturer, marketer, retailer and servicer of the revolutionary Sleep Number bed, which allows individuals to adjust the firmness and support of each side at the touch of a button. The company offers further personalization through its solutions-focused line of Sleep Number pillows, sheets and other bedding products. And as the only national specialty mattress retailer, consumers can take advantage of an enhanced mattress-buying experience at one of more than 400 Sleep Number stores across the country, online at SleepNumber.com, or via phone at (800) Sleep Number or (800) 753-3768.

Forward-looking Statements

Statements used in this news release relating to future plans, events, financial results or performance are forward-looking statements subject to certain risks and uncertainties including, among others, such factors as general and industry economic trends; consumer confidence; the effectiveness of the company’s marketing messages; the efficiency of its advertising and promotional efforts; consumer acceptance of its products, product quality, innovation and brand image; availability of attractive and cost-effective consumer credit options; execution of the company’s retail store distribution strategy; the company’s dependence on significant suppliers, and its ability to maintain relationships with key suppliers, including several sole-source suppliers; the vulnerability of key suppliers to recessionary pressures, …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

This Metric Suggests You're Right to Own Select Comfort.

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By Seth Jayson, The Motley Fool

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Here at The Motley Fool, I’ve long cautioned investors to keep a close eye on inventory levels. It’s a part of my standard diligence when searching for the market’s best stocks. I think a quarterly checkup can help you spot potential problems. For many companies, products that sit on the shelves too long can become big trouble. Stale inventory may be sold for lower prices, hurting profitability. In extreme cases, it may be written off completely and sent to the shredder.

Basic guidelines
 In this series, I examine inventory using a simple rule of thumb: Inventory increases ought to roughly parallel revenue increases. If inventory bloats more quickly than sales grow, this might be a sign that expected sales haven’t materialized. Is the current inventory situation at Select Comfort (NAS: SCSS) out of line? To figure that out, start by comparing the company’s inventory growth to sales growth. How is Select Comfort doing by this quick checkup? At first glance, not so great. Trailing-12-month revenue increased 25.8%, and inventory increased 43.1%. Comparing the latest quarter to the prior-year quarter, the story looks potentially problematic. Revenue increased 16.7%, and inventory increased 43.1%. Over the sequential quarterly period, the trend looks worrisome. Revenue dropped 10.6%, and inventory grew 22.6%.

Advanced inventory

I don’t stop my checkup there, because the type of inventory can matter even more than the overall quantity. There’s even one type of inventory bulge we sometimes like to see. You can check for it by examining the quarterly filings to evaluate the different kinds of inventory: raw materials, work-in-progress inventory, and finished goods. (Some companies report the first two types as a single category.)

A company ramping up for increased demand may increase raw materials and work-in-progress inventory at a faster rate when it expects robust future growth. As such, we might consider oversized growth in those categories to offer a clue to a brighter future, and a clue that most other investors will miss. We call it “positive inventory divergence.”

On the other hand, if we see a big increase in finished goods, that often means product isn’t moving as well as expected, and it’s time to hunker down with the filings and conference calls to find out why.

What’s going on with the inventory at Select Comfort? I chart the details below for both quarterly and 12-month periods.

Source: S&P Capital IQ. Data is current as of latest fully reported quarter. Dollar amounts in millions. FY = fiscal year. TTM = trailing 12 months.

Source: …read more
Source: FULL ARTICLE at DailyFinance