Unlock: Tempur Sealy (TPX) – Weak Channel Checks, Cash to the Bank

It pays to do fundamental research. Here is an example of what Jaguar Weekend Research looks like. On first day of the year, we sent this bearish case on TPX to clients after weak channel checks. Stock is off -10% since in straight line. To learn more about our approach and how you can become a successful trader, sign up for 2 week trial and test drive live chat room with some of the best traders: SUBSCRIBE

January 1, 2017

This developer, manufacturer, and distributor of bedding products could potentially see a worse-than-expected Q4 based on recent numbers from the International Sleep Products Association (ISPA).

First, as a recap, in late October, the company announced its Q3 results:

• EPS of $1.32 vs $1.21 (Beat)
• Revenue of $832.4M vs $834.84M (Miss)
• Total Net Sales fell 5.4%
• North America Net Sales fell 5.8
• International Net Sales fell 3.5%
• Lowered FY16 Guidance

Per the ISPA, U.S. bedding sales volume (including mattresses and foundations) decreased 4.7% in the latest quarter against a +0.8% in the prior quarter and a +4.0% from a year prior. Bedding dollar sales fell 2.5% against a +5.5% comp in the prior quarter and +7.6% comp a year ago. In terms of mattress units, they fell 3.3% while mattress sales fell 1.2%. Performance across certain regions showed a deceleration as well. The North Central and South sales were down 0.2% and 0.5% with units down 4.8% and 1.6% respectively. The Northeast and West showed sales declines of 7.1% and 5.4% with units down 10.3% and 8.7% respectively.

Here are a couple of notable option trades that started back in November:

• On 11/21, there was a buyer of 1,000 January 60/50 Put Spreads for 1.45
• On 12/30, there was a buyer of 800 February 65 Puts for 2.73 – 2.82

While not official, the next catalyst for Tempur Sealy will be its Q4 earnings, which are typically released in early February.