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1. Company Snapshot

1.a. Company Description

Tempur Sealy International, Inc., together with its subsidiaries, designs, manufactures, markets, and distributes bedding products in the United States and internationally.It provides mattresses, foundations and adjustable foundations, and adjustable bases, as well as other products comprising pillows, mattress covers, sheets, cushions, and various other accessories and comfort products under the TEMPUR, Tempur-Pedic, Sealy, and Stearns & Foster brands.The company sells its products through approximately 650 company-owned stores, e-commerce, and call centers; and third party retailers, including third party distribution, hospitality, and healthcare, as well as offers Cocoon by Sealy branded products through online.


It also operates a portfolio of retail brands, including Tempur-Pedic retail stores, Sleep Outfitters, Sleep Solutions Outlet, SOVA, and other retail brands.In addition, the company is involved in licensing its Sealy, Tempur, and Stearns & Foster brands, technology, and trademarks to other manufacturers.Tempur Sealy International, Inc.


was founded in 1846 and is based in Lexington, Kentucky.

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1.b. Last Insights on TPX

Breaking News: Tempur Sealy International, Inc. witnessed a jump in share price on above-average trading volume. The latest trend in earnings estimate revisions suggests potential strength ahead.

1.c. Company Highlights

2. Somnigroup International Posts Record Quarterly Performance

Somnigroup International delivered a robust quarterly performance, with net sales reaching $2.1 billion, a 63% year-over-year increase. Adjusted EBITDA stood at $419 million, up 52%, while adjusted EPS was $0.95, a 16% rise. The actual EPS came in at $0.835, slightly below estimates of $0.858. The company's strong performance was driven by the successful integration of Mattress Firm and the execution of operating initiatives, resulting in a 5% like-for-like sales growth.

Publication Date: Nov -13

📋 Highlights
  • Record Sales & EBITDA Growth:: Net sales surged to $2.1B (+63% YoY), with adjusted EBITDA at $419M (+52%).
  • Strong International & Mattress Firm Performance:: International like-for-like sales up 11%; Mattress Firm same-store sales grew 5%.
  • Significant Synergy Targets:: $60M EBITDA sales synergies by 2025 and $100M annual cost synergies projected.
  • Robust Cash Flow & Balance Sheet:: Record operating cash flow of $408M and free cash flow of $360M; leverage ratio at 3.3x.
  • Capital Return & Strategic Investments:: 50% of free cash flow to be allocated to shareholder returns from 2026; 25% stake acquired in luxury brand Kingsdown.

Segmental Performance

Tempur Sealy North America reported 5% like-for-like sales growth, driven by a strong performance across the portfolio and price points. International operations led the growth, with an 11% increase, while Mattress Firm's same-store sales grew 5%, driven by superior in-store execution and consumer experience investments. The company's focus on innovation and advertising has contributed to the improvement in the bedding industry, diverging from the housing market.

Guidance and Outlook

The company has raised its adjusted EPS guidance to $2.60-$2.75, reflecting a sales midpoint of approximately $7.5 billion. For the fourth quarter, Tempur Sealy's like-for-like growth is expected to be mid- to high-single digits, while Mattress Firm is expected to grow low-single digits. The company expects to achieve $100 million in annual run-rate net cost synergies and $100 million in run-rate sales synergies.

Valuation and Leverage

With a P/E Ratio of 61.27 and an EV/EBITDA of 26.88, the company's valuation appears to be premium. However, the expected benefits from falling interest rates could lead to a significant lift in EPS. The company's leverage ratio stands at 3.3x, with consolidated debt less cash at $4.6 billion. The company plans to allocate approximately 50% of free cash flow to capital returns to shareholders starting in the first quarter of 2026.

Growth Strategy

The company is focused on long-term growth, with a goal to deliver innovative solutions for improved sleep. Somnigroup International has made a passive equity investment in Kingsdown, a mattress brand, and is constantly evaluating opportunities to acquire other manufacturers, retailers, or adjacents. Analysts estimate next year's revenue growth at 2.5%, and the company's disciplined approach to capital utilization is expected to drive future value creation.

3. NewsRoom

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First Look: CME outage, Black Friday shifts, AI job impact

Nov -28

Source: gurufocus.com

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Tempur Sealy (TPX) Reports Next Week: Wall Street Expects Earnings Growth

Feb -13

Source: zacks.com

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3 GARP Stocks That Investors Can Scoop Up for Maximum Returns

Feb -13

Source: zacks.com

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Here's Why Momentum in Tempur Sealy (TPX) Should Keep going

Feb -06

Source: zacks.com

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Tempur Sealy Successfully Completes Acquisition of Mattress Firm

Feb -05

Source: prnewswire.com

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Tempur Sealy International, Inc. to Change its Name to Somnigroup International Inc.

Feb -05

Source: prnewswire.com

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Tempur Sealy Cleared to Close Acquisition of Mattress Firm

Feb -04

Source: prnewswire.com

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Strength Seen in Tempur Sealy (TPX): Can Its 6.0% Jump Turn into More Strength?

Feb -04

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.00%)

6. Segments

Bedding

Expected Growth: 4.0%

Tempur Sealy's 4.0% growth in bedding is driven by increasing demand for premium mattresses, expansion into new markets, and strategic partnerships. The company's focus on innovative products, such as its Tempur-Pedic and Stearns & Foster brands, has also contributed to growth. Additionally, the rising trend of online mattress shopping and the company's strong e-commerce platform have helped to boost sales.

Other

Expected Growth: 4.0%

Tempur Sealy's 4.0% growth in 'Other' segment is driven by increasing demand for its adjustable bed bases, growth in online sales, and expansion into new international markets. Additionally, the company's focus on product innovation, strategic partnerships, and effective marketing strategies have contributed to this growth.

7. Detailed Products

Tempur-Pedic Mattresses

High-quality mattresses designed to provide optimal support and pressure relief for a restful night's sleep

Sealy Mattresses

Affordable and durable mattresses offering a range of comfort and support options

Stearns & Foster Mattresses

Luxury mattresses featuring advanced materials and craftsmanship for exceptional comfort and support

Adjustable Bed Bases

Customizable bed bases allowing for adjustable head and foot elevation, massage, and other features

Pillows and Bedding Accessories

A range of pillows, toppers, and bedding accessories designed to enhance sleep comfort and quality

8. Tempur Sealy International, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Tempur Sealy International, Inc. faces moderate threat from substitutes, as consumers have limited alternatives to traditional mattresses, but there are some substitutes available, such as airbeds and futons.

Bargaining Power Of Customers

Tempur Sealy International, Inc. has a large customer base, but individual customers have limited bargaining power due to the company's strong brand recognition and wide distribution network.

Bargaining Power Of Suppliers

Tempur Sealy International, Inc. has a moderate level of bargaining power over its suppliers, as it is a large customer, but suppliers of raw materials such as foam and fabric have some bargaining power due to their limited availability.

Threat Of New Entrants

The threat of new entrants is low for Tempur Sealy International, Inc., as the industry has high barriers to entry, including significant capital requirements and established distribution networks.

Intensity Of Rivalry

The mattress industry is highly competitive, with several established players, including Tempur Sealy International, Inc., competing for market share, leading to a high level of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 88.99%
Debt Cost 5.09%
Equity Weight 11.01%
Equity Cost 11.80%
WACC 5.83%
Leverage 808.44%

11. Quality Control: Tempur Sealy International, Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Toll Brothers

A-Score: 5.7/10

Value: 6.8

Growth: 8.1

Quality: 6.7

Yield: 2.0

Momentum: 4.0

Volatility: 6.3

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Patrick Industries

A-Score: 5.3/10

Value: 4.6

Growth: 4.8

Quality: 5.5

Yield: 4.0

Momentum: 6.0

Volatility: 7.0

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Whirlpool

A-Score: 4.3/10

Value: 6.2

Growth: 1.7

Quality: 1.8

Yield: 9.0

Momentum: 2.0

Volatility: 5.0

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Steven Madden

A-Score: 4.3/10

Value: 3.9

Growth: 5.2

Quality: 5.4

Yield: 5.0

Momentum: 1.5

Volatility: 4.7

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Tempur Sealy

A-Score: 4.2/10

Value: 1.8

Growth: 4.8

Quality: 4.5

Yield: 2.0

Momentum: 6.0

Volatility: 6.0

1-Year Total Return ->

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Mohawk

A-Score: 4.2/10

Value: 7.6

Growth: 3.7

Quality: 5.5

Yield: 0.0

Momentum: 2.5

Volatility: 5.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

65.81$

Current Price

65.81$

Potential

-0.00%

Expected Cash-Flows