Spotting Winners: Tempur Sealy (NYSE:TPX) And Home Furnishings Stocks In Q2
Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at Tempur Sealy (NYSE:TPX) and the best and worst performers in the home furnishings industry.
A healthy housing market is good for furniture demand as more consumers are buying, renting, moving, and renovating. On the other hand, periods of economic weakness or high interest rates discourage home sales and can squelch demand. In addition, home furnishing companies must contend with shifting consumer preferences such as the growing propensity to buy goods online, including big things like mattresses and sofas that were once thought to be immune from e-commerce competition.
The 6 home furnishings stocks we track reported a slower Q2. As a group, revenues missed analysts’ consensus estimates by 1.3% while next quarter’s revenue guidance was 3.7% below.
Big picture, the Federal Reserve has a dual mandate of inflation and employment. The former had been running hot throughout 2021 and 2022 but cooled towards the central bank's 2% target as of late. This prompted the Fed to cut its policy rate by 50bps (half a percent) in September 2024. Given recent employment data that suggests the US economy could be wobbling, the markets will be assessing whether this rate and future cuts (the Fed signaled more to come in 2024 and 2025) are the right moves at the right time or whether they're too little, too late for a macro that has already cooled.
Thankfully, home furnishings stocks have been resilient with share prices up 8.5% on average since the latest earnings results.
Tempur Sealy (NYSE:TPX)
Established through the merger of Tempur-Pedic and Sealy in 2012, Tempur Sealy (NYSE:TPX) is a bedding manufacturer known for its innovative memory foam mattresses and sleep products
Tempur Sealy reported revenues of $1.23 billion, down 2.8% year on year. This print fell short of analysts’ expectations by 3.5%. Overall, it was a softer quarter for the company with a miss of analysts’ revenue estimates and underwhelming earnings guidance for the full year.
Company Chairman and CEO Scott Thompson commented, "We are pleased to see our global market outperformance mitigate the impact of softer than anticipated industry volumes. Despite an estimated mid-single digit industry decline over the quarter, more than our anticipated low-single digit decline for the period, our sales were only slightly below internal expectations. Our strong gross margin performance and solid cost controls resulted in healthy earnings growth in the second quarter.
Interestingly, the stock is up 12.3% since reporting and currently trades at $54.61.
Read our full report on Tempur Sealy here, it’s free.
Best Q2: Mohawk Industries (NYSE:MHK)
Established in 1878, Mohawk Industries (NYSE:MHK) is a leading producer of floor-covering products for both residential and commercial applications.
Mohawk Industries reported revenues of $2.80 billion, down 5.1% year on year, falling short of analysts’ expectations by 1.2%. However, the business still had a strong quarter with optimistic earnings guidance for the next quarter and a decent beat of analysts’ operating margin estimates.
The market seems happy with the results as the stock is up 18.4% since reporting. It currently trades at $159.49.
Is now the time to buy Mohawk Industries? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: Purple (NASDAQ:PRPL)
Founded by two brothers, Purple (NASDAQ:PRPL) creates sleep and home comfort products such as mattresses, pillows, and bedding accessories.
Purple reported revenues of $120.3 million, up 2% year on year, falling short of analysts’ expectations by 6.3%. It was a softer quarter as it posted full-year revenue guidance missing analysts’ expectations.
Purple delivered the weakest performance against analyst estimates and weakest full-year guidance update in the group. As expected, the stock is down 18.8% since the results and currently trades at $0.95.
Read our full analysis of Purple’s results here.
Leggett & Platt (NYSE:LEG)
Founded in 1883, Leggett & Platt (NYSE:LEG) is a diversified manufacturer making products for various industries.
Leggett & Platt reported revenues of $1.13 billion, down 7.6% year on year. This result met analysts’ expectations. However, it was a slower quarter as it logged underwhelming earnings guidance for the full year and a miss of analysts’ operating margin estimates.
Leggett & Platt had the slowest revenue growth among its peers. The stock is up 6.5% since reporting and currently trades at $13.69.
Read our full, actionable report on Leggett & Platt here, it’s free.
Lovesac (NASDAQ:LOVE)
Known for its oversized, premium beanbags, Lovesac (NASDAQ:LOVE) is a specialty furniture brand selling modular furniture.
Lovesac reported revenues of $156.6 million, up 1.3% year on year. This print met analysts’ expectations. Taking a step back, it was a slower quarter as it logged underwhelming earnings guidance for the full year.
Lovesac pulled off the highest full-year guidance raise among its peers. The stock is up 32.7% since reporting and currently trades at $27.91.
Read our full, actionable report on Lovesac here, it’s free.
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