Update: Select Comfort Earnings

| About: Select Comfort (SCSS)

Summary

The company beat earnings consensus by over 14%.

The recent news reaffirms our opinion that the company is a long-term buy.

We expected the company to start gaining traction this year after a dismal end to 2013 .

Select Comfort (NASDAQ:SCSS) had a huge day back in July, up nearly 15% in a day, after posting 2Q earnings. The company posted earnings of $0.16 (compared to $0.14 consensus) and revenues of $235 million (compared to $224 consensus).

The strong quarter comes as customers took a liking to Select Comfort's new products. Most notably, its SleepIQ technology. The company also reiterated its full year 2014 EPS guidance, which is $1.07 a share. Meanwhile, consensus estimates sits at $1.09.

Shares are up 11% since our November article. The stock is still off our $32 price target, suggesting over 50% upside. As we mentioned in November:

One area that the company has yet to see a meaningful benefit is from its increased marketing spending. In 3Q, Select Comfort ramped up its media spending to drive traffic and awareness. Yet, part of the problem is that Select Comfort, like other mattress companies, relied on infomercials to advertise its products. Now the medium has changed and the emphasis is on the omnichannel - TV, Internet and print. Spending on marketing efforts this year will be around $150 million. This compares to only $60 million that the company spent in 2009.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.