A Select Comfort Corp. (SCSS) Insider Tucked In 10,000 Shares of Stock

Investors should still be concerned about integration risk at Tempur Sealy, and while it’s certainly possible that industry consolidation could help the company this recovery in earnings per share is far from guaranteed. As a result it is probably best to avoid the stock at least until its quarterly earnings per share are in line with what the sell-side is forecasting for next year.

Select Comfort Corp. (NASDAQ:SCSS) can also be compared to mattress retailer Mattress Firm Holding Corp (NASDAQ:MFRM). Revenue and earnings were up at double-digit rates in the company’s most recent quarter compared to the same period in the previous fiscal year, though at a trailing P/E of 32 markets have already priced in a good deal of future growth. Analysts are bullish, with their earnings forecasts placing the stock’s valuation at 16 times forward earnings estimates and a five-year PEG ratio less than 1. Many market players are skeptical, however: according to the most recent data a sizable percentage of Mattress Firm Holding’s float is held short.

Therefore Mattress Firm holding also seems like something of a speculative pick, and investors might be best advised to hold off on mattress related companies in general. Even with the insider purchase at Select Comfort, recent financial results have not been that good and markets are already placing a good deal of hope on the combination of Tempur-Pedic and Sealy to improve industry conditions. As a result there may not be much further upside for Select Comfort based on the consolidation thesis either.

Disclosure: I own no shares of any stocks mentioned in this article.