Analysts are watching earnings report this week.
After a five-quarter streak of lackluster profits, bed maker Select Comfort may finally meet Wall Street expectations when it reports financial results Thursday.
Piper Jaffray analyst Peter Keith predicted Monday that the Plymouth-based company will hit the mark given recent price increases for its products.
“Select Comfort’s shares have an intriguing setup into Thursday for a numbers of reasons,” Keith said in a research note. “Our analysis of year-over-year pricing suggests pricing increased 7.6 percent in the first quarter. [That’s] an acceleration from our estimated 5.1 percent … We see the potential for revenue upside, leading to in-line first-quarter earnings per share.”
The company declined to comment Monday on its upcoming financial results.
Keith expects first-quarter earnings of 29 cents a share while the consensus estimate from analysts is 32 cents. In any case, it will be an easy quarterly comparison for Select Comfort, because its financial results were weak a year ago.
Over the past year, the company has blamed its poor performance on a myriad issues, including sizable costs for new TV ads, poor holiday sales, discounting among its competitors and larger-than-expected costs for both new stores and product innovations.
But meeting analysts’ expectations could be a noteworthy turning point for the maker of high-end Sleep Number beds. The company has missed forecasts for five consecutive quarters, which has hurt its stock price and eroded its reputation on Wall Street. Shares have fallen to nearly half if its $34 stock price two years ago.
CEO Shelly Ibach vowed in February to change the company’s fortunes in 2014 with an invigorated push on the company’s new products — including a snore-stopping bed — and an aggressive TV ad campaign. But even with new products, locations and marketing, Select Comfort has forecast full-year adjusted-earnings to be flat and match the $1.07 per share performance of 2013. Profits are expected to decline for the first half of this year before rising in the second half, Ibach has said.
While Keith remained positive on Select Comfort’s efforts, other analysts proved more cautious about what to expect Thursday.
Zacks Equity Research cq issued a research report Monday in which analysts pointed to the company’s recent troubles.
Select Comfort “has resorted to product innovation and aggressive marketing techniques to regain lost momentum. … Though [the initiative] looks promising, we believe it will take some time for the company to put itself back on the growth trajectory … We will not be constructive on the stock until we see signs of improvement.”
Zacks has rated the stock a “strong sell.” Select Comfort’s stock rose 53 cents or 3 percent a share Monday to close at $17.65.
Dee DePass • 612-673-7725