Investors might want to bet on Tempur Sealy (TPX), as earnings estimates for this company have been showing solid improvement lately. The stock has already gained solid short-term price momentum, and this trend might continue with its still improving earnings outlook.
The rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this mattress maker, should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. This insight is at the core of our stock rating tool -- the Zacks Rank.
The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.
For Tempur Sealy, there has been strong agreement among the covering analysts in raising earnings estimates, which has helped push consensus estimates considerably higher for the next quarter and full year.
The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:
12 Month EPS
Current-Quarter Estimate Revisions
The earnings estimate of $0 per share for the current quarter represents a change of -100% from the number reported a year ago.
The Zacks Consensus Estimate for Tempur Sealy has increased 100.14% over the last 30 days, as eight estimates have gone higher compared to no negative revisions.
Current-Year Estimate Revisions
For the full year, the company is expected to earn $3.60 per share, representing a year-over-year change of -10.22%.
In terms of estimate revisions, the trend for the current year also appears quite encouraging for Tempur Sealy. Over the past month, eight estimates have moved higher compared to no negative revisions, helping the consensus estimate increase 86.28%.
Favorable Zacks Rank
The promising estimate revisions have helped Tempur Sealy earn a Zacks Rank #2 (Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.
Investors have been betting on Tempur Sealy because of its solid estimate revisions, as evident from the stock's 6.7% gain over the past four weeks. As its earnings growth prospects might push the stock higher, you may consider adding it to your portfolio right away.
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Tempur Sealy International, Inc. (TPX) : Free Stock Analysis Report
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