Bullish stock to watch: Sleep Number Corp (NASDAQ: SNBR)

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Sleep Number Corp (NASDAQ: SNBR) stock rose over 1%  (as of  9:43 am GMT-4 ; Source: Google finance) after the company posted better than expected results for the third quarter of FY 19 and raised the outlook for the full year. The company’s revolutionary Sleep Number 360 smart beds are delivering life-changing sleep and drove double-digit demand growth on top of double-digit demand growth the prior year.

SNBR has generated $190 million in net cash from operating activities year to date, which is up 41% compared to the same period last year. The company has also invested $47 million in capital expenditures year to date of the $60 million expected for 2019. SNBR has ended the third quarter 2019 with a leverage ratio of 2.6x EBITDAR. The company continue to operate with a targeted range of 2.5x to 3.0x EBITDAR though seasonal fluctuations are expected. The company’s return on invested capital expanded 470 basis points year over year to 18.4% for the trailing twelve month period.

SNBR in the third quarter of FY 19 has reported the adjusted earnings per share of 94 cents, beating the analysts’ estimates for the adjusted earnings per share of 79 cents, as per analysts polled by FactSet. The company had reported the adjusted revenue growth of 14 percent to $474.78 million in the third quarter of FY 19, beating the analysts’ estimates for revenue of $462.1 million. The company reported that company-controlled comparable sales rose 10% while the analysts had expected 7.7% rise. The gross profit margin expanded 200 basis points to 62.4% of net sales in the third quarter of 2019 compared with 60.4% for the same period last year.

Operating income increased 55% to $39 million, or 8.2% of net sales in the third quarter of 2019, which is up 210 basis points compared to the prior year’s third quarter

Additionally, the company has returned $121 million to shareholders year to date through share repurchases, out of approximately $145 million expected for 2019. The company has also announced replenishment of $500 million share repurchase authorization effective the beginning of the fiscal fourth quarter.

The company has raised its 2019 earnings per diluted share outlook to a range of $2.45 to $2.75. The outlook includes up to 10% net sales growth for the full-year 2019 and a 25% effective income tax rate for the fourth quarter 2019.

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