What Happened?
Shares of bedding manufacturer Somnigroup (NYSE: SGI) jumped 11.1% in the morning session after the company reported strong third-quarter financial results that beat expectations and raised its full-year guidance. The bedding manufacturer announced that its revenue grew by 63.3% year-over-year to $2.12 billion, surpassing analyst forecasts of $2.06 billion. The company's adjusted earnings per share of $0.95 also topped Wall Street's expectations of $0.86. This strong performance was driven by significant growth in its direct-to-consumer sales, which offset a miss in its wholesale segment. Adding to the positive news, Somnigroup increased its full-year adjusted EPS guidance to a midpoint of $2.68. The comprehensive earnings beat and improved outlook fueled investor confidence in the company's direction.
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What Is The Market Telling Us
Somnigroup’s shares are not very volatile and have only had 7 moves greater than 5% over the last year. Moves this big are rare for Somnigroup and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 9 months ago when the stock gained 5.9% on the news that a federal judge cleared the way for its (Tempur-Sealy's) merger with Mattress Firm. After the ruling, Wedbush upgraded Tempur-Sealy's stock from Neutral to Buy, stating, "Friday evening, Judge Eskridge denied the FTC from blocking the pending merger of Tempur-Sealy and Mattress Firm (MFRM)—clearing what is likely the last major hurdle preventing a tie up of the country's largest mattress manufacturer and specialty mattress retailer." Tempur-Sealy first offered $4 billion for Mattress Firm in 2023, aiming to expand its product lineup and reach more customers. The deal is expected to complement TPX's operations, cut costs, and contribute to earnings within the first year of closing.
Somnigroup is up 57.3% since the beginning of the year, and at $87.79 per share, has set a new 52-week high. Investors who bought $1,000 worth of Somnigroup’s shares 5 years ago would now be looking at an investment worth $3,606.
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