This stock is a buy here in my opinion. Understanding that Wall Street is an expectations game in the short-run, and the company didn't deliver (though had a reasonable explanation in my view), let's look at the facts on a relative basis:
- SCSS is trading at ~11.4x 2013 EPS (likely conservative) excluding cash (over $3/share)
- SCSS should grow earnings 15-20% at least this year
- TPX is trading at 17x 2013 EPS despite expectations of flat revenues versus SCSS' 10% same store sales growth; TPX has over $800mm of debt and will be assuming more debt with the Sealy acquisition
Assuming you believe in the housing recovery story, then it's clear in my view that SCSS is dramatically undervalued vs. TPX.