Sleep Country Canada (TSX:ZZZ) stock was down 1.41% in early afternoon trading on November 9. Shares are down 32% in 2018 so far and the stock dropped to a 52-week low of $19.85 earlier this week. The stock was pummeled by weaker-than-expected same-store sales growth in its third-quarter earnings report.
The company released its third-quarter results on November 1. Revenues climbed 4.4% year-over-year to $183.9 million while same-store sales only increased 0.2% compared to the prior year.
Adjusted net income rose 4.6% to $24.7 million and e-commerce sales more than doubled in the quarter.
As far as technicals are concerned Sleep Country looks oversold heading into the final hours of the trading week. Its Relative Strength Index (RSI) was at 22 early on Friday which puts it well into oversold territory.
Sleep Country has been solid in the first nine months of 2018 as adjusted earnings per share have climbed 8.1% year-over-year to $1.33. It opened 13 new stores in the year so far and renovated another 19.
The board of directors declared a dividend of $0.185 per share in the quarter which represents a 3.1% yield after its November plummet.
Sleep Country leadership is optimistic that it can produce a strong finish in the final quarter of 2018. Retailers are entering the busy season in a relatively strong economy and Sleep Country’s robust e-commerce business should continue to give it a boost.
The dividend yield is no monster, but Sleep Country stock is worth adding on the cheap in early November.
