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Tempur-Pedic Rises Steadily After Morning Share Repurchase Announcement

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Mattress and pillow producer Tempur-Pedic (NYSE: TPX) confirmed this morning that it has been repurchasing shares in the open market, restoring confidence in the company following disappointing management guidance revisions this past Wednesday, June 6.

Shares of Tempur-Pedic rose steadily today, climbing more than 14%. This followed a decline of more than 45% on June 6.

Share repurchases are often seen as a sign that members of management believe their company is undervalued. If Tempur-Pedic's valuation later rises, the company could achieve profits from its repurchases.

Since an information asymmetry exists between investors and management, investors might see share repurchases as a positive signal by members of management, implying that they have a positive outlook on the company. Thus, investors might view repurchases as an occasion to purchase shares themselves.

Mattress producer Sealy (NYSE: ZZ) traded lower today, closing down around 2 cents or 1.2%.

Disclosure: At the time of this writing, I did not own shares of any companies mentioned in this post.

Posted-In: News Financing Buybacks

 

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