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

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Tempur Sealy International, Inc. shares soared 6% in the last trading session to close at $66.92. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 13.3% gain over the past four weeks.

Tempur Sealy shares surged yesterday as investor confidence grew over progress in its planned $4 billion acquisition of Mattress Firm Inc. On Friday, a U.S. judge in Texas approved the deal, overturning a previous Federal Trade Commission (FTC) decision that had blocked it in July due to antitrust concerns, arguing it would limit choices for U.S. mattress buyers. Despite the approval, the judge ruled that Tempur Sealy and Mattress Firm cannot finalize the acquisition until February 7, allowing time for the FTC to file an appeal.

This mattress maker is expected to post quarterly earnings of $0.57 per share in its upcoming report, which represents a year-over-year change of +7.6%. Revenues are expected to be $1.19 billion, up 1.8% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Tempur Sealy, the consensus EPS estimate for the quarter has been revised 1.4% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on TPX going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Tempur Sealy is a member of the Zacks Retail - Home Furnishings industry. One other stock in the same industry, Home Depot (HD - Free Report) , finished the last trading session 0.8% lower at $408.76. HD has returned 5.9% over the past month.

Home Depot's consensus EPS estimate for the upcoming report has changed +2% over the past month to $3.07. Compared to the company's year-ago EPS, this represents a change of +8.9%. Home Depot currently boasts a Zacks Rank of #2 (Buy).


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