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Somnigroup International Inc. (SGI)
:SGI

Somnigroup International (SGI) AI Stock Analysis

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Somnigroup International

(NYSE:SGI)

Rating:77Outperform
Price Target:
$73.00
▲(10.87%Upside)
Somnigroup International demonstrates strong financial performance and technical momentum, but is tempered by valuation concerns due to high P/E ratio. Positive corporate events and a mixed earnings call sentiment further influence the score.
Positive Factors
International Sales
Analyst is optimistic around the potential for sales upside, particularly in the international segment with over 6% growth.
Market Share
SGI continues to gain market share with new Sealy Posturepedic hybrid beds and the Tempur-Pedic brand, offsetting underperforming Stearns & Foster.
Strategic Partnerships
The company also recently announced new supply and distribution partnership agreements, further supporting its position as the industry leader.
Negative Factors
Gross Margin
Gross margin of 42.2% decreased by some 115 basis points year-over-year and landed nearly 105 basis points below the Street’s expectations of 43.3%.
Sales and Earnings Outlook
Management brought down its outlook for sales by 3% and EPS by 12%.
Sales Performance
North America sales were down 22% year over year (versus consensus of a 15% decline).

Somnigroup International (SGI) vs. SPDR S&P 500 ETF (SPY)

Somnigroup International Business Overview & Revenue Model

Company DescriptionSomnigroup International (SGI) is a leading company specializing in the development and distribution of advanced sleep-related products and technologies. Operating within the health and wellness sector, SGI offers a diverse range of products, including high-tech sleep tracking devices, premium mattresses, and personalized sleep solutions designed to enhance sleep quality and overall wellbeing. With a commitment to innovation and research, SGI aims to revolutionize the way individuals approach sleep health globally.
How the Company Makes MoneySomnigroup International generates revenue through a combination of product sales, subscription services, and strategic partnerships. The company sells its sleep-related products directly to consumers through its online platform and retail partners, earning a substantial portion of its revenue from these transactions. Additionally, SGI offers subscription-based services for its digital sleep tracking platform, providing users with personalized insights and recommendations for a recurring fee. The company also engages in collaborations with healthcare providers and wellness centers, integrating its technologies into broader health solutions, which further contributes to its earnings.

Somnigroup International Earnings Call Summary

Earnings Call Date:May 08, 2025
(Q1-2025)
|
% Change Since: 8.92%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mix of positive and negative aspects. The company showed strong performance in international markets, successful product launches, and progress on synergy initiatives. However, these were counterbalanced by declines in North American sales, challenges in the U.S. bedding market, and revised earnings guidance due to macroeconomic pressures.
Q1-2025 Updates
Positive Updates
Strong International Performance
The international business reported mid-single-digit sales growth, with high single-digit growth excluding FX impact. This marks the eighth quarter of mid- to high single-digit sales expansion on a constant currency basis.
Successful Product Launches
The launch of the new Sealy Posturepedic collection was successful, with early results indicating solid performance and share gain. The Tempur products continue to drive growth internationally.
Progress on Synergies from Mattress Firm Acquisition
The company is on track to achieve $100 million in annual run rate synergies by 2028, with $15 million expected in 2025, up from an initial expectation of $10 million.
Tariff Mitigation Strategy
Successfully mitigated half of the $120 million potential tariff impact, with the balance being offset by a 2% price increase starting in the third quarter.
Negative Updates
Decrease in North American Sales
Tempur Sealy North America's like-for-like net sales decreased by 3%, and wholesale channel sales declined by 8%.
U.S. Bedding Market Weakness
The U.S. bedding market was down high single digits, with consumer confidence impacting sales, leading to a revision in 2025 guidance.
Second Quarter Tariff Impact
The company expects a one-time tariff-related headwind of approximately $5 million in the second quarter due to a timing lag in price adjustments.
Revised 2025 Earnings Guidance
Adjusted earnings per share guidance was revised down to $2.30 to $2.65, reflecting lower U.S. bedding industry outlook and recent softness in consumer confidence.
Company Guidance
During the Somnigroup First Quarter 2025 Earnings Call, several key metrics were highlighted regarding the company's guidance. The company reported net sales of approximately $1.6 billion and an adjusted earnings per share (EPS) of $0.49 for the first quarter. Despite the challenges faced during the President's Day holiday period and declining U.S. consumer confidence, Somnigroup's performance remained robust in the international market, with mid-single-digit sales growth. The company outperformed the U.S. bedding market, which was reportedly down by high single digits. Somnigroup revised its 2025 guidance, forecasting adjusted EPS to range between $2.30 and $2.65 with sales expected to be between $7.3 billion and $7.5 billion after intercompany eliminations. The guidance reflects a lower U.S. bedding industry outlook, anticipating a mid-single-digit decline in 2025, with slight improvements expected in the second half. Additionally, Somnigroup plans to achieve at least $100 million in annual run rate synergies by 2028, with $15 million anticipated in 2025, following the acquisition of Mattress Firm. Tariffs are expected to impact approximately $750 million of the company's cost of goods sold, potentially resulting in $120 million of incremental annual costs, which the company aims to mitigate through supplier collaboration and price adjustments.

Somnigroup International Financial Statement Overview

Summary
Somnigroup International shows strong revenue growth and profitability. The income statement is robust with consistent revenue growth and good profit margins. The balance sheet reflects high leverage but is supported by efficient use of funds. Cash flow is positive, showcasing effective cash management.
Income Statement
85
Very Positive
Somnigroup International has demonstrated consistent revenue growth over the years, with a notable increase in gross profit margin, indicating improved cost management. The net profit margin has been stable, reflecting effective expense control. EBIT and EBITDA margins have shown healthy levels, contributing to robust profitability. Despite minor fluctuations, the overall trajectory is positive, showcasing strong financial performance.
Balance Sheet
72
Positive
The company maintains a high debt-to-equity ratio, suggesting significant leverage. However, the positive return on equity indicates efficient use of shareholder funds. The equity ratio is relatively low, implying reliance on debt financing. While this presents potential risk, the company's ability to generate returns tempers concerns.
Cash Flow
78
Positive
Operating cash flow has consistently covered net income, showing strong cash generation capabilities. Free cash flow growth has been positive, supporting capital expenditures and financing activities. The cash flow ratios reflect effective cash management, although high financing cash flows suggest reliance on external funding.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
5.35B4.93B4.93B4.92B4.93B3.68B
Gross Profit
2.25B2.18B2.13B2.05B2.16B1.64B
EBIT
515.90M634.20M607.20M680.60M912.30M532.10M
EBITDA
702.90M804.20M739.30M807.30M1.00B627.40M
Net Income Common Stockholders
274.90M384.30M368.10M455.70M624.50M348.80M
Balance SheetCash, Cash Equivalents and Short-Term Investments
111.10M117.40M74.90M69.40M300.70M65.00M
Total Assets
11.33B5.98B4.55B4.36B4.32B3.31B
Total Debt
2.02B4.47B3.27B3.37B2.86B1.70B
Net Debt
1.91B4.35B3.19B3.30B2.56B1.64B
Total Liabilities
8.58B5.41B4.22B4.37B4.03B2.80B
Stockholders Equity
2.74B559.00M323.40M-22.10M285.80M503.60M
Cash FlowFree Cash Flow
552.90M569.20M384.90M72.30M599.80M543.40M
Operating Cash Flow
642.70M666.50M570.30M378.80M723.10M654.70M
Investing Cash Flow
-2.92B-96.70M-187.80M-315.30M-554.80M-146.60M
Financing Cash Flow
2.30B1.08B-384.30M-279.10M76.50M-522.60M

Somnigroup International Technical Analysis

Technical Analysis Sentiment
Positive
Last Price65.84
Price Trends
50DMA
61.88
Positive
100DMA
61.50
Positive
200DMA
57.16
Positive
Market Momentum
MACD
0.97
Positive
RSI
58.65
Neutral
STOCH
66.06
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SGI, the sentiment is Positive. The current price of 65.84 is above the 20-day moving average (MA) of 65.12, above the 50-day MA of 61.88, and above the 200-day MA of 57.16, indicating a bullish trend. The MACD of 0.97 indicates Positive momentum. The RSI at 58.65 is Neutral, neither overbought nor oversold. The STOCH value of 66.06 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SGI.

Somnigroup International Risk Analysis

Somnigroup International disclosed 21 risk factors in its most recent earnings report. Somnigroup International reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 1 New Risks
1.
The acquisition of Mattress Firm may not be as successful as anticipated, and we may not achieve the intended benefits or do so within the intended timeframe. Q4, 2024

Somnigroup International Peers Comparison

Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
82
Outperform
$4.43B26.8122.16%2.21%10.32%18.55%
77
Outperform
$12.61B81.9936.79%85.99%
SGSGI
77
Outperform
$13.65B42.0117.92%0.85%8.96%-22.99%
ELELF
67
Neutral
$6.63B61.2715.97%46.27%-26.45%
62
Neutral
$6.84B11.412.80%3.87%2.70%-24.58%
59
Neutral
$4.38B40.12-10.58%-1.68%-302.11%
ELEL
59
Neutral
$24.63B147.29-17.27%2.50%-3.70%-235.59%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
SGI
Somnigroup International
65.84
17.89
37.31%
EL
The Estée Lauder Companies
69.00
-46.04
-40.02%
IPAR
Inter Parfums
138.53
26.38
23.52%
COTY
Coty
5.01
-4.87
-49.29%
ELF
e.l.f. Beauty
116.51
-73.07
-38.54%
HIMS
Hims & Hers Health
56.86
34.82
157.99%

Somnigroup International Corporate Events

Executive/Board ChangesShareholder Meetings
Somnigroup International Holds Annual Stockholders Meeting
Neutral
May 14, 2025

On May 14, 2025, Somnigroup International held its Annual Meeting of Stockholders where 168,959,709 shares were represented out of the 208,582,329 outstanding shares. During the meeting, all company nominees for director positions were elected, Ernst and Young LLP was ratified as the independent auditor for the year ending December 31, 2025, and the compensation of the company’s named executive officers was approved on an advisory basis.

The most recent analyst rating on (SGI) stock is a Buy with a $61.00 price target. To see the full list of analyst forecasts on Somnigroup International stock, see the SGI Stock Forecast page.

Private Placements and FinancingBusiness Operations and StrategyRegulatory Filings and Compliance
Somnigroup Announces Secondary Stock Offering Completion
Neutral
May 13, 2025

On May 12, 2025, Somnigroup International Inc. announced a secondary offering of 15,376,743 shares of its common stock by the former majority shareholder of Mattress Firm Group Inc., a subsidiary of IBEX Topco B.V. The shares were sold to Goldman Sachs & Co. LLC, acting as the sole underwriter, and Somnigroup will not receive any proceeds from this transaction. The offering was registered under the Securities Act of 1933, and the shares were sold on May 13, 2025. This transaction does not involve Somnigroup issuing or selling any new shares, and it is part of a broader strategy to manage shareholder interests and market positioning.

The most recent analyst rating on (SGI) stock is a Buy with a $61.00 price target. To see the full list of analyst forecasts on Somnigroup International stock, see the SGI Stock Forecast page.

Business Operations and StrategyFinancial Disclosures
Somnigroup International Releases Updated Investor Presentation
Positive
May 8, 2025

On May 8, 2025, Somnigroup International Inc. released an updated investor presentation to be used in meetings with investors. The presentation highlights the company’s strategic direction, focusing on consumer-centric innovation and operational excellence. Somnigroup’s vertically integrated strategy and robust capital allocation are designed to optimize consumer experience and drive sales growth. The company anticipates tariff impacts in 2025, with potential price increases to be passed to consumers. Since 2015, Somnigroup has seen significant growth in sales, EBITDA, and EPS, reflecting its strong market positioning and effective management.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.