Somnigroup International Inc.
SGI
$77.37
+7.43%
Somnigroup International Inc. is a global bedding company operating in the Consumer Defensive sector, specifically within Household & Personal Products. It designs, manufactures, distributes, and retails sleep solutions through a portfolio of well-known brands including Tempur-Pedic, Sealy, and Stearns & Foster, serving over 100 countries via its owned businesses like Mattress Firm and Tempur Sealy International. The company is a vertically integrated market leader with a significant omnichannel retail platform, positioning it as a dominant player in the premium bedding space. The current investor narrative is shaped by its post-acquisition integration of Mattress Firm, which has driven significant revenue growth but also introduced operational complexity and debt, with recent attention focused on its ability to sustain profitability and cash flow generation amidst a challenging macroeconomic environment for discretionary purchases.…
SGI
Somnigroup International Inc.
$77.37
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SGI 12-Month Price Forecast
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Somnigroup International Inc.'s 12-month outlook, with a consensus price target around $100.58 and implied upside of +30.0% versus the current price.
Average Target
$100.58
2 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
2
covering this stock
Price Range
$62 - $101
Analyst target range
Analyst coverage for SGI is limited, with only two analysts providing estimates, indicating this may be a smaller or less-followed mid-cap stock, which can lead to higher volatility and less efficient price discovery. The consensus sentiment, inferred from recent institutional ratings, is bullish, with firms like Truist Securities, UBS, and Piper Sandler maintaining 'Buy' or 'Overweight' ratings as recently as March 2026, though Goldman Sachs has a 'Neutral' stance. The average revenue estimate for the coming period is $9.28 billion, with a range from $9.12 billion to $9.46 billion, and an average EPS estimate of $6.15, suggesting analysts expect solid top-line growth and significant bottom-line expansion. The tight range between the low and high EPS estimates ($6.02 to $6.31) signals strong conviction in the earnings outlook, but the minimal number of analysts means the consensus view is not broad-based and could be subject to significant change with new coverage.
Bulls vs Bears: SGI Investment Factors
The investment debate for SGI is a classic tension between strong fundamental growth prospects and severe near-term operational and market risks. The bull case is anchored in the transformative Mattress Firm acquisition, which has driven massive revenue growth (54.7% YoY in Q4) and is expected to yield significant forward earnings (EPS $6.15), supported by robust free cash flow generation. The bear case highlights the stock's technical breakdown, elevated leverage (Debt/Equity 2.66), inconsistent profitability, and a valuation that still demands perfect execution. Currently, the bearish evidence from price action and balance sheet strain appears stronger in the near term, overshadowing the promising long-term story. The single most important tension is whether the company can successfully integrate Mattress Firm to stabilize margins and deliver on the forward EPS of $6.15, thereby justifying its current premium valuation multiples. The resolution of this integration success versus margin compression will dictate the stock's direction.
Bullish
- Strong Forward Earnings Growth: Analysts project forward EPS of $6.15, implying a forward P/E of 17.8x, a significant discount to the trailing P/E of 47.9x. This reflects market confidence in a substantial earnings recovery, driven by the integration of the Mattress Firm acquisition and operational leverage.
- Robust Free Cash Flow Generation: The company generates substantial cash, with TTM free cash flow of $633.2 million. This strong cash generation provides the financial flexibility to service its significant debt load, fund operations, and support the recently announced dividend, signaling management's confidence in sustained cash flows.
- Dominant Market Position & Vertical Integration: As a vertically integrated leader with brands like Tempur-Pedic and Sealy, and ownership of the Mattress Firm retail network, SGI controls a significant portion of the premium bedding value chain. This omnichannel platform and global reach in over 100 countries provide a durable competitive moat.
- Analyst Consensus Remains Bullish: Despite recent price weakness, institutional analysts from Truist, UBS, and Piper Sandler maintain 'Buy' or 'Overweight' ratings as of March 2026. The average EPS estimate of $6.15 shows strong conviction, with a tight range between the low ($6.02) and high ($6.31) estimates.
Bearish
- Severe Technical Downtrend & High Volatility: The stock is in a capitulation phase, down 15.36% in the past month and 17.85% over three months, severely underperforming the market. With a high beta of 1.33, it is highly sensitive to market sentiment, and trading near $72.9 puts it just 25% above its 52-week low of $53.1, indicating persistent selling pressure.
- Elevated Leverage and Liquidity Strain: The balance sheet carries a high debt-to-equity ratio of 2.66, and the current ratio of 0.83 indicates potential short-term liquidity constraints. The company relies on operating cash flow ($99.4M in Q4) to service debt, making it vulnerable to any downturn in discretionary consumer spending.
- Inconsistent Profitability & Margin Pressure: Profitability is volatile, with a net loss of -$33.1 million in Q1 2025 swinging to a $140.8 million profit in Q4. Operating margins compressed from 14.7% in Q3 to 13.7% in Q4, suggesting integration costs or inflationary pressures are eroding earnings quality despite strong revenue.
- Premium Valuation Despite Weakness: The trailing P/E of 47.9x is elevated compared to its own recent history (24.9x in Q3 2025) and the forward P/E of 17.8x implies extremely high growth expectations. The EV/EBITDA of 25.5x also suggests a premium valuation that leaves little room for execution error.
SGI Technical Analysis
The stock is in a pronounced downtrend, having declined 17.85% over the past three months and 15.36% over the past month, sharply underperforming the broader market as indicated by a -13.85% and -11.08% relative strength, respectively. Currently trading at $72.9, the price sits near the lower end of its 52-week range of $53.1 to $98.56, approximately 25% above the 52-week low, suggesting the stock is in a zone of potential value but remains under significant selling pressure. The recent momentum is decisively negative and accelerating, with the 1-month loss of 15.36% far exceeding the 3-month loss of 17.85%, indicating a capitulation phase that diverges from the stock's positive 1-year return of 16.68%. This severe short-term weakness, coupled with a high beta of 1.33, signals the stock is experiencing amplified volatility and is highly sensitive to broader market risk-off sentiment. Key technical support is clearly defined at the 52-week low of $53.1, while immediate overhead resistance is at the recent highs near $98. A breakdown below the $70 level could accelerate a test of the 52-week low, whereas a recovery above the $85-$90 range would be needed to signal a potential trend reversal, though the high beta implies any rally will likely be volatile.
Beta
1.33
1.33x market volatility
Max Drawdown
-29.2%
Largest decline past year
52-Week Range
$53-$99
Price range past year
Annual Return
+42.0%
Cumulative gain past year
| Period | SGI Return | S&P 500 |
|---|---|---|
| 1m | -4.1% | -0.3% |
| 3m | -16.1% | -2.0% |
| 6m | -7.6% | +3.5% |
| 1y | +42.0% | +36.2% |
| ytd | -12.8% | -0.9% |
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SGI Fundamental Analysis
Revenue growth has been exceptionally strong but is showing signs of sequential deceleration; Q4 2025 revenue was $1.87 billion, representing a massive 54.7% year-over-year increase, yet this marks a decline from the $2.12 billion reported in Q3 2025. The multi-quarter trend reveals volatility, with revenue dipping in Q1 2025 to $1.60 billion before surging, indicating potential lumpiness post-acquisition and sensitivity to consumer spending cycles. The company is profitable, with Q4 2025 net income of $140.8 million and a net margin of 7.5%, but profitability is inconsistent, as evidenced by a net loss of -$33.1 million in Q1 2025. Gross margins have been relatively stable in the mid-40% range, with Q4 2025 at 44.9%, though operating margins compressed to 13.7% in Q4 from 14.7% in Q3, reflecting potential integration costs or inflationary pressures. The balance sheet carries significant leverage, with a debt-to-equity ratio of 2.66, but the company generates substantial cash flow, with TTM free cash flow of $633.2 million and an ROE of 12.4%. The current ratio of 0.83 indicates potential liquidity strain, suggesting the company relies on operating cash flow—which was $99.4 million in Q4—to service its debt and fund operations, rather than a strong liquid balance sheet.
Quarterly Revenue
$1.9B
2025-12
Revenue YoY Growth
+0.54%
YoY Comparison
Gross Margin
+0.44%
Latest Quarter
Free Cash Flow
$633200000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
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Valuation Analysis: Is SGI Overvalued?
Given the company's positive net income, the primary valuation metric is the Price-to-Earnings (PE) ratio. The trailing PE is elevated at 47.9x, while the forward PE is significantly lower at 17.8x, indicating the market is pricing in a substantial recovery in earnings over the next year, aligning with analyst EPS estimates averaging $6.15. Compared to its own historical range, the current trailing PE of 47.9x is above the Q3 2025 level of 24.9x and the Q4 2024 level of 34.2x, suggesting the stock is trading at a premium to its recent history despite the price decline, as earnings have compressed. The stock trades at a Price-to-Sales ratio of 2.46x and an EV/EBITDA of 25.5x; without a direct industry average provided, the high single-digit trailing PE and elevated EV/EBITDA suggest the market is assigning a premium valuation, likely justified by its market-leading position and the growth from its Mattress Firm acquisition, but also reflecting high expectations for margin recovery and earnings growth to materialize.
PE
47.9x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range -1934x~5395x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
25.5x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks are pronounced, centered on leverage and earnings volatility. The debt-to-equity ratio of 2.66 indicates a highly leveraged capital structure, requiring consistent cash flow to service obligations. Profitability is inconsistent, as evidenced by the swing from a Q1 2025 net loss of -$33.1 million to a Q4 profit of $140.8 million, raising concerns about the sustainability of earnings post-acquisition. Furthermore, a current ratio of 0.83 signals potential liquidity strain, meaning the company relies heavily on its operating cash flow of $99.4 million (Q4) rather than liquid assets to meet short-term liabilities, increasing vulnerability to any operational hiccup.
Market & Competitive Risks are elevated due to valuation compression and macro sensitivity. The stock trades at a premium trailing P/E of 47.9x and an EV/EBITDA of 25.5x, making it susceptible to multiple contractions if growth expectations are not met. With a beta of 1.33, SGI's stock exhibits 33% more volatility than the broader market, amplifying losses during risk-off periods, as seen in its -15.36% one-month return versus the SPY's -4.28%. As a discretionary consumer goods company, it faces direct headwinds from any economic slowdown that curbs big-ticket purchases, a risk underscored by the sequential revenue decline from $2.12 billion in Q3 to $1.87 billion in Q4.
Worst-Case Scenario involves a perfect storm of integration failures and a consumer recession. If the Mattress Firm integration proves more costly than expected, leading to sustained margin compression and a miss on the $6.15 EPS target, investor confidence could collapse. Coupled with a sharp downturn in discretionary spending, this could trigger a wave of analyst downgrades and force a re-rating to a much lower multiple. The realistic downside is significant, with the stock potentially retesting its 52-week low of $53.1. From the current price of ~$72.9, this represents a maximum drawdown of approximately -27%, not accounting for the potential for even lower prices if earnings deteriorate further.