Tuesday, January 5, 2010

Tempur Pedic up afterhours on increased 2010 earnings guidance (TPX)

First of all, DAMN.  While I was impressed with Tempur Pedic's (TPX) results back in July, I decided not to chase the shares.  That was at $15, now they're at $25.


Well they're actually at $27.50 in after hours trading, after the company gave preliminary guidance for the just-ended fourth quarter 2009 and gave initial guidance for 2010.  The fourth quarter should come in about 7cents ahead of expectations, while initial 2010 guidance of 1.40-1.50 per share easily surpasses Wall Street's expectations of 1.26.


Some of the numerous shorts might be covering in the after hours, sending shares higher on yet another impressive performance.


From the release:


"Chief Executive Officer Mark Sarvary commented, "Fourth quarter sales exceeded our prior expectations in both our US and International segments, primarily due to a better than expected macro environment together with success from sales and marketing programs. Throughout the recession, we have used the most recent volume levels as the basis for our plan for the next four quarters, and we have used the same methodology for 2010 sales guidance. While the macro environment continues to be very hard to predict, we have augmented this methodology with a comprehensive review of seasonality and market conditions across each of our major markets."


Chief Financial Officer Dale Williams commented, "In our planning for 2010, we expect benefits from our productivity programs and fixed cost leverage will be partially offset by our outlook for rising commodity prices and increased investments in marketing and R&D. As a result, we currently anticipate operating margin to expand 100 basis points or more for the full year in 2010."
It's a bummer that I and anyone listening didn't buy shares last time I looked at this company, but as always, opportunities are made up easier than losses.  I'll again stay away from shares at this level, as the Free Cash Flow Yield (FCFY) is only about 7.4% even if I use aggressive 2011 estimates of 1.75 in earnings.

Copyright 2010 AlphaNinja

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