Financial Analysis: Sonos (NASDAQ:SONO) & Purple Innovation (NASDAQ:PRPL)

Sonos (NASDAQ:SONO) and Purple Innovation (NASDAQ:PRPL) are both small-cap consumer discretionary companies, but which is the superior stock? We will compare the two businesses based on the strength of their dividends, risk, valuation, earnings, analyst recommendations, institutional ownership and profitability.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Sonos and Purple Innovation, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sonos	0	3	2	0	2.40
Purple Innovation	1	2	0	0	1.67

Sonos presently has a consensus target price of $20.00, indicating a potential upside of 23.69%. Purple Innovation has a consensus target price of $16.25, indicating a potential upside of 441.67%. Given Purple Innovation’s higher probable upside, analysts plainly believe Purple Innovation is more favorable than Sonos.

Profitability

This table compares Sonos and Purple Innovation’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sonos	3.82%	19.10%	8.67%
Purple Innovation	-10.74%	N/A	-10.89%

Valuation and Earnings

This table compares Sonos and Purple Innovation”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sonos	$1.44 billion	1.33	-$61.14 million	$0.45	35.93
Purple Innovation	$453.45 million	0.03	-$51.41 million	($11.24)	-0.27

Purple Innovation has lower revenue, but higher earnings than Sonos. Purple Innovation is trading at a lower price-to-earnings ratio than Sonos, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Sonos has a beta of 1.94, indicating that its share price is 94% more volatile than the S&P 500. Comparatively, Purple Innovation has a beta of 1.45, indicating that its share price is 45% more volatile than the S&P 500.

Institutional and Insider Ownership

85.8% of Sonos shares are owned by institutional investors. Comparatively, 88.4% of Purple Innovation shares are owned by institutional investors. 1.3% of Sonos shares are owned by company insiders. Comparatively, 54.0% of Purple Innovation shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Summary

Sonos beats Purple Innovation on 10 of the 14 factors compared between the two stocks.

About Sonos

Sonos, Inc., together with its subsidiaries, designs, develops, manufactures, and sells audio products and services in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. It offers wireless, portable, and home theater speakers; components; and accessories. The company offers its products through approximately 10,000 third-party retail stores, including custom installers of home audio systems; and e-commerce retailers, as well as through its website. The company was formerly known as Rincon Audio, Inc. and changed its name to Sonos, Inc. in May 2004. Sonos, Inc. was incorporated in 2002 and is headquartered in Santa Barbara, California.

About Purple Innovation

Purple Innovation, Inc. designs and manufactures sleep and other products in the United States and internationally. The company offers mattresses, pillows, cushions, bases, sheets, platforms, adjustable bases, mattress protectors, foundations, blankets, duvets, duvet covers, seat cushions, and pet beds under the Purple brand. It markets and sells its products through its e-commerce online channels, retail brick-and-mortar wholesale partners, third-party online retailers, and Purple showrooms, as well as through its website, Purple.com. The company was founded in 2010 and is headquartered in Lehi, Utah.