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Solid Segmental Businesses to Aid Tempur's (TPX) Q3 Earnings

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Tempur Sealy International, Inc. (TPX - Free Report) is scheduled to report third-quarter 2021 results on Oct 28, before the opening bell.

In the last reported quarter, the company’s earnings and revenues topped the Zacks Consensus Estimate by 31.7% and 1.3% as well as increased 295% and 76% on a year-over-year basis, respectively.

It surpassed earnings estimates in all the trailing four quarters, with the average being 30.2%.

Trend in Estimate Revision

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has increased 2.4% to 85 cents per share over the past seven days. The estimated figure indicates a 14.9% increase from the year-ago earnings of 74 cents per share. Also, the consensus mark for revenues is $1.32 billion, suggesting 17% year-over-year growth.

Factors to Note

Broad-based demand across geographies and channels is expected to have benefited Tempur’s sales in the third quarter. Strong sales performance in both the segments — North America and International — on the back of solid demand from retail partners has been aiding the company. Further, its online sales gained strength in the United States. Also, the company’s strength across its brands and products combined with the acquisition of Dreams were other tailwinds.

Segment wise, the North American business segment (accounting for almost 87% of total sales) is expected to have benefited from an uptick in consumer spending and market share gains driven by its strong competitive position within the industry. Tempur has been benefiting from consumers’ increased focus on home-related spending, which has gained traction since the onset of the pandemic.

The Zacks Consensus Estimate for North American sales of $1,094 million indicates 25.9% growth from the year-ago period. The consensus mark for the International business sales (accounting for 13% of its total sales) is $227 million, suggesting an increase of 92.4% from the year-ago reported figure.

In addition to strong sales, favorable segmental margins have been expanding overall margins and thereby increasing profitability. Furthermore, product superiority, brand strength, manufacturing efficiency and quality, omni-channel distribution platform as well as substantial cash flow are expected to have reflected on its performance.

What Our Model Indicates

Our proven model predicts an earnings beat for Tempur this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Earnings ESP: Its Earnings ESP is +4.14%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently has a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks With Favorable Combination

Here are some other companies in the Zacks Retail-Wholesale sector, which according to our model have the right combination of elements to post an earnings beat in their respective quarters to be reported.

The Cheesecake Factory Incorporated (CAKE - Free Report) has an Earnings ESP of +0.98% and a Zacks Rank #3.

Five Below, Inc. (FIVE - Free Report) has an Earnings ESP of +3.90% and a Zacks Rank #3.

Wingstop Inc. ((WING - Free Report) ) has an Earnings ESP of +0.87% and a Zacks Rank #3.

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