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Is Now The Time To Put Tempur Sealy International (NYSE:TPX) On Your Watchlist?


Investors are often guided by the idea of discovering ‘the next big thing’, even if that means buying ‘story stocks’ without any revenue, let alone profit. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

So if this idea of high risk and high reward doesn’t suit, you might be more interested in profitable, growing companies, like Tempur Sealy International (NYSE:TPX). While profit isn’t the sole metric that should be considered when investing, it’s worth recognising businesses that can consistently produce it.

View our latest analysis for Tempur Sealy International

How Fast Is Tempur Sealy International Growing Its Earnings Per Share?

In the last three years Tempur Sealy International’s earnings per share took off; so much so that it’s a bit disingenuous to use these figures to try and deduce long term estimates. So it would be better to isolate the growth rate over the last year for our analysis. Outstandingly, Tempur Sealy International’s EPS shot from US$2.04 to US$3.49, over the last year. It’s not often a company can achieve year-on-year growth of 71%. Shareholders will be hopeful that this is a sign of the company reaching an inflection point.

It’s often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company’s growth. Tempur Sealy International maintained stable EBIT margins over the last year, all while growing revenue 32% to US$5.1b. That’s a real positive.

The chart below shows how the company’s bottom and top lines have progressed over time. To see the actual numbers, click on the chart.

NYSE:TPX Earnings and Revenue History June 15th 2022

The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. While crystal balls don’t exist, you can check our visualization of consensus analyst forecasts for Tempur Sealy International’s future EPS 100% free.

Are Tempur Sealy International Insiders Aligned With All Shareholders?

It’s a necessity that company leaders act in the best interest of shareholders and so insider investment always comes as a reassurance to the market. So it is good to see that Tempur Sealy International insiders have a significant amount of capital invested in the stock. Holding US$97m worth of stock in the company is no laughing matter and insiders will be committed in delivering the best outcomes for shareholders. This would indicate that the goals of shareholders and management are one and the same.

Is Tempur Sealy International Worth Keeping An Eye On?

Tempur Sealy International’s earnings per share have been soaring, with growth rates sky high. That sort of growth is nothing short of eye-catching, and the large investment held by insiders should certainly brighten the view of the company. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. So at the surface level, Tempur Sealy International is worth putting on your watchlist; after all, shareholders do well when the market underestimates fast growing companies. Still, you should learn about the 3 warning signs we’ve spotted with Tempur Sealy International.

Although Tempur Sealy International certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see insider buying, then this free list of growing companies that insiders are buying, could be exactly what you’re looking for.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.



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