Shaun Currie, CFA
Long/short equity, hedge fund analyst, momentum

Select Comfort: 70% Upside Ahead

Executive summary:

  • SCSS is down almost 40% over the past six months due to weak results attributable to a weak marketing strategy and lack of product innovation.
  • On the company's recent earnings call, the company announced a new marketing campaign and the introduction of a new product cycle, something analysts have been waiting for.
  • If these new initiatives work, EPS could double to $2 and the stock could have 70% upside.
  • If they do not work, the company's clean balance sheet and free cash flow generation enables management to repurchase shares at a discounted valuation to its peers.

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Select Comfort (NASDAQ:SCSS) reported quarterly earnings last Wednesday, and the stock has reacted favorably since (up about 10%). Though...

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