Tomorrow, Mattress Firm (NASDAQ: MFRM ) will release its latest quarterly results. As the consumer segment of the economy has picked up steam over the past several years, discretionary spending on things like mattresses is finally starting to grow, and Mattress Firm has managed to capitalize on that trend.
Mattress Firm is one of the newer players in the publicly traded markets, having had its IPO in late 2011. Since then, though, it has made a strong impression, overcoming some big challenges to rise more than 50% from its opening-day IPO close. Let's take an early look at what's been happening with Mattress Firm over the past quarter and what we're likely to see in its quarterly report.
Stats on Mattress Firm
| Analyst EPS Estimate | $0.36 |
| Change From Year-Ago EPS | 16% |
| Revenue Estimate | $274.39 million |
| Change From Year-Ago Revenue | 31% |
| Earnings Beats in Past 4 Quarters | 3 |
Source: Yahoo! Finance.
Will Mattress Firm's earnings let investors sleep well this quarter?
Wall Street's views on Mattress Firm's earnings have gotten a bit more pessimistic in recent months, as analysts have reduced April-quarter earnings estimates by $0.04 per share as well as cut a nickel from their earnings-per-share consensus for next fiscal year. The stock, however, hasn't hesitated in its strong upward move, rising more than 30% since late February.
Much of the gains that Mattress Firm's stock has enjoyed came after the company's previous quarterly report in late March. Even though it missed earnings estimates and saw its adjusted earnings per share fall by nearly half, favorable guidance for the full year helped earn upgrades from several analysts. With acquisitions of smaller companies, Mattress Firm has driven its revenue growth, even though same-store sales actually declined.
But Mattress Firm has to deal with competitors that are highly motivated to thwart its growth plans. On one hand, Tempur-Pedic's (NYSE: TPX ) now-completed acquisition of Sealy has broadened the former high-end mattress specialist's product line to cover more of the lower-end business that Mattress Firm has historically focused on. At the same time, Select Comfort (NASDAQ: SCSS ) has managed to take over its primary competitor in the air-filled mattress market, giving it sole control of that segment of the overall mattress market.
The big unresolved question for Mattress Firm is the extent to which the improving housing market will drive mattress sales. Traditionally, many homebuyers make purchases of big-ticket home-furnishings to go with their new homes, and as housing activity is on the rise, that should be a good sign for the industry. Yet if buyers are stretching their budgets on new homes, then less money could be left over for discretionary spending.
In Mattress Firm's report, watch for signs of how the company plans to tackle the new Tempur-Sealy matchup. With newly invigorated competition, Mattress Firm needs to step up its game to retain its fast-paced growth.
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