Why Tempur-Pedic Shares Plummeted

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of mattress maker Tempur-Pedic International (NYS: TPX) plunged 22% on Friday after the company's full-year forecast missed Wall Street's view.

So what: While Tempur-Pedic's first-quarter profit rose 16% on strong sales, a particularly weak outlook for 2012 is triggering concerns over slowing growth. The stock has been on a tear over the past several months on impressive revenue growth, but today's news is forcing Mr. Market to sober up rather quickly.

Now what: Management now sees full-year EPS of $3.80 to $3.95 on revenue of $1.6 billion to $1.65 billion, versus the consensus of $3.97 and $1.66 billion. Longer-term, CEO Mark Savary noted on a conference call with analysts that the company still expects to meet its goal of $2 billion in sales by 2014 and $3 billion by 2016. So for value-vultures with a multiyear time frame, today's big pullback might be a good opportunity to swoop in.

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At the time thisarticle was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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