Somnigroup International Inc. (NYSE: SGI)

Sector: Consumer Cyclical Industry: Furnishings, Fixtures & Appliances CIK: 0001206264
Market Cap 18.99 Bn
P/B 168.76
P/E 125.40
P/S 7.03
ROIC (Qtr) 4.86
Div Yield % 0.17
Rev 1y % (Qtr) 63.28
Total Debt (Qtr) 6.62 Bn
Debt/Equity (Qtr) 2.22
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About

Tempur Sealy International, Inc. (TPX) is a prominent player in the bedding industry, with a focus on designing, manufacturing, distributing, and retailing a wide range of bedding products. The company boasts a robust portfolio of well-known brands such as Tempur-Pedic, Sealy, and Stearns & Foster, and maintains a global manufacturing footprint with approximately 12,000 employees. Tempur Sealy's primary business activities revolve around the creation and sale of a comprehensive range of bedding products, encompassing mattresses, pillows, and other...

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Investment thesis

Bull case

  • Operating cash flow of 829.80M provides strong 20.85x coverage of stock compensation 39.80M, indicating sustainable incentive practices.
  • Robust free cash flow of 700.30M exceeds capital expenditure of 129.50M by 5.41x, indicating strong organic growth funding capability.
  • Operating cash flow of 829.80M provides exceptional 461x coverage of minority interest expenses 1.80M, showing strong core operations.
  • Operating cash flow of 829.80M fully covers other non-current liabilities 551.60M by 1.50x, showing strong long-term stability.
  • Cash position of 100.20M provides exceptional 55.67x coverage of minority interest expenses 1.80M, indicating strong liquidity.

Bear case

  • Operating cash flow of 829.80M barely covers its investment activities of (2.97B), with a coverage ratio of -0.28, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 100.20M against inventory of 645.10M, the 0.16 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Operating cash flow of 829.80M provides thin coverage of dividend payments of (118.50M) with a -7 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 100.20M provide limited coverage of acquisition spending of (2.82B), which is -0.04x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating earnings of 621.20M show weak coverage of depreciation charges of 223.20M, with a 2.78 ratio indicating high capital intensity and potential reinvestment needs.

Consolidation Items Breakdown of Revenue (2024)

Consolidation Items Breakdown of Revenue (2024)

Peer comparison

Companies in the Furnishings, Fixtures & Appliances
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 SGI Somnigroup International Inc. 18.99 Bn 125.40 7.03 6.62 Bn
2 SN SharkNinja, Inc. 18.48 Bn 32.14 3.04 0.89 Bn
3 MHK Mohawk Industries Inc 8.23 Bn 19.54 0.77 2.34 Bn
4 PATK Patrick Industries Inc 5.10 Bn 175.24 10.70 1.53 Bn
5 WHR Whirlpool Corp /De/ 4.88 Bn 15.36 0.31 7.19 Bn
6 HNI Hni Corp 2.23 Bn 44.66 1.16 0.46 Bn
7 TILE Interface Inc 2.17 Bn 30.23 2.24 0.39 Bn
8 LEG Leggett & Platt Inc 1.59 Bn 5.64 0.39 1.66 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.82 0.98
EV to Cash from Ops. EV/CFO -615.97 -9.92
EV to Debt EV to Debt 3.13 25.70
EV to EBIT EV/EBIT 73.26 17.69
EV to EBITDA EV/EBITDA 56.27 15.96
EV to Free Cash Flow [EV/FCF] EV/FCF -206.55 17.28
EV to Market Cap EV to Market Cap 1.09 1.76
EV to Revenue EV/Rev 7.66 1.40
Price to Book Value [P/B] P/B 168.76 9.34
Price to Earnings [P/E] P/E 125.40 16.89
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 2.66 1.74
Dividend Payout Ratio % Div Payout % (Qtr) 37.20 9.37
Dividend per Basic Share Div per Share (Qtr) 0.58 0.51
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 17.39 28.74
Interest Coverage Int. cover (Qtr) 2.59 -23.23
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -19.35 -9.80
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -3.84 70.23
Dividend Growth (1y) % Div 1y % (Qtr) 16.00 0.00
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 4.54 -367.80
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 9.72 -34.93
EBIT Growth (1y) % EBIT 1y % (Qtr) -0.50 -198.55
EBT Growth (1y) % EBT 1y % (Qtr) -22.97 -72.49
EPS Growth (1y) % EPS 1y % (Qtr) -30.67 -131.79
FCF Growth (1y) % FCF 1y % (Qtr) 34.67 0.53
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 40.25 -2.36
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.60 1.16
Cash Payout Ratio Cash Payout (Qtr) 0.12 0.13
Cash Ratio Cash Ratio (Qtr) 0.06 0.30
Current Ratio Curr Ratio (Qtr) 0.75 1.96
Debt to Equity Ratio Debt/Equity (Qtr) 2.22 0.57
Interest Cover Ratio Int Coverage (Qtr) 2.59 -23.23
Times Interest Earned Times Interest Earned (Qtr) 2.59 -23.23
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 12.40 -2.26
EBIT Margin % EBIT Margin % (Qtr) 9.11 -4.46
EBT Margin % EBT Margin % (Qtr) 5.59 -7.49
Gross Margin % Gross Margin % (Qtr) 42.30 33.73
Net Profit Margin % Net Margin % (Qtr) 4.60 -8.04