Don’t Think; Don’t Worry; Just Sleep – We’ll Take Care of The Rest (SNBR)

Today we get out of bed and jump straight into the arms of somnambulant specialists Sleep Number Corp. (NASDAQ:SNBR), makers of beds, bedding, and all else that contributes to a superior circadian dormancy.

The company has a 22 year history as a listed stock, the first twenty of which saw the shares average just $20.

Then the Batflu struck!

Last March shareholders waved bye-bye to $20 and watched the stock climb to an all-time high of $133 – struck just last Friday.

As you can imagine, we find it difficult to conceive that such a move will be lasting, particularly as the competition in the mattress field is anything but lethargic, and the current bullish insomnia is not slated to last much longer.

Basic Accounting

Fundamentally, we believe, the stock is now headed for some shuteye.

To wit –

• P/E is 36.86,
• Dividend yield is zilch,
• P/B is a big donut, while
• A huge short float of 11.91% (short ratio of 7.93) makes the trade a more complicated proposition.

The company delivers earnings this Wednesday, but even in a best case scenario, we can’t imagine a report that would jack the share price for more than an hour or two.

Stock’s way too overbought.

As the chart below shows, both daily and weekly RSI signals are excessive , a development that normally shoots bolts of anxiety through the legs of fund managers.

We, too, get a chill of the jiminys when we see it.

Take a peek (in green, at bottom) –  

With kind regards,

Hugh L. O’Haynew

Follow @HughLOHaynew