Mixed Day for Mattress Makers: Tempur-Pedic Surges, Select Comfort Plunges

Spot the winner and the loser from today’s mattress maker earnings announcements:

FactSet

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Shares of Tempur-Pedic International (TPX) are up 12% today, while Select Comfort (SCSS) stock is down about 18%, in both cases the moves reflecting investor sentiment in the wake of fourth-quarter earnings.

You wouldn’t know it from the chart, but neither company had clearly good or clearly bad earnings in what’s becoming an increasingly competitive sector.

Tempur-Pedic’s bounce is due to an improving sales picture and its earnings and revenue beating consensus estimates — but sales in the quarter nevertheless fell 7%. Its full-year forecast came in below analyst estimates.

Meanwhile, Select Comfort’s profit fell but revenue rose 17% on better sales, but results still disappointed.

Those mixed results reflect the mixed view analysts have of the stocks.

S&P Capital IQ reiterated its Sell rating on Tempur-Pedic, based on market share erosion and projected lower gross margins and profit. But analysts at Stifel Nicolaus reaffirmed their Buy rating on the stock on the back of stabilized US sales, new products (the Tempur Choice adjustable line) and potential accretion from Tempur-Pedic’s acquisition of Sealy (ZZ).

Stifel also likes Select Comfort, taking a forgiving view of the sales drop-off late in the quarter:

Management blamed the U.S. fiscal cliff issues on the sales trouble, stating that sales rebounded shortly after Congress sorted out the mess. While we hate to blame everything on macro, it is hard to explain otherwise given the sales pace for the first ten weeks of the quarter and the latest three weeks in January. Obviously, the fact that this happened in the last two weeks of the quarter made it impossible to react or adjust promotions or expenses.

Analysts at Wedbush also waved off Select Comfort’s sales decline:

While disappointing, we continue to believe in the company�s ability to raise brand awareness, gain market share, and drive increased profitability and therefore, we are reiterating our Outperform rating on expected weakness.

The same analysts, Joan Storms and John Garrett have a Neutral rating on Tempur-Pedic’s stock, however:

Due to increased competition and lack of nearterm catalysts, yet acknowledge newer products are having some success resulting in more stabilizing sales trends and the product pipeline seems strong. We acknowledge TPX remains the leader among specialty mattresses, but clearly increased competition has been eroding its ability to continue to grow at the previous pace.

Including today’s moves Tempur-Pedic’s price-to-forward-earnings ratio is at about 16, according to FactSet, while Select Comfort’s is just over 13. Ater a 40% decline last year, Tempur-Pedic is now up 35% this year; Select Comfort, which rose 21% last year, is now down 11% in 2013.