Critical Contrast: Sleep Number (NASDAQ:SNBR) & Sonos (NASDAQ:SONO)

Sonos (NASDAQ:SONO) and Sleep Number (NASDAQ:SNBR) are both consumer discretionary companies, but which is the better business? We will compare the two companies based on the strength of their risk, institutional ownership, valuation, dividends, analyst recommendations, profitability and earnings.

Risk and Volatility

Sonos has a beta of 1.88, suggesting that its share price is 88% more volatile than the S&P 500. Comparatively, Sleep Number has a beta of 2.49, suggesting that its share price is 149% more volatile than the S&P 500.

Institutional & Insider Ownership

85.8% of Sonos shares are held by institutional investors. Comparatively, 85.7% of Sleep Number shares are held by institutional investors. 1.3% of Sonos shares are held by company insiders. Comparatively, 3.6% of Sleep Number shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Sonos and Sleep Number, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sonos	0	3	2	0	2.40
Sleep Number	2	2	0	0	1.50

Sonos currently has a consensus price target of $20.00, suggesting a potential upside of 12.68%. Sleep Number has a consensus price target of $3.50, suggesting a potential upside of 2,700.00%. Given Sleep Number’s higher probable upside, analysts clearly believe Sleep Number is more favorable than Sonos.

Profitability

This table compares Sonos and Sleep Number’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%
Sleep Number	-12.98%	N/A	-16.48%

Earnings and Valuation

This table compares Sonos and Sleep Number”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sonos	$1.44 billion	1.45	-$61.14 million	$0.45	39.44
Sleep Number	$1.34 billion	0.00	-$131.96 million	($7.56)	-0.02

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

Summary

Sonos beats Sleep Number on 11 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 Sleep Number

Sleep Number Corporation, together with its subsidiaries, offers sleep solutions and services in the United States. The company designs, manufactures, markets, retails, and services beds, pillows, sheets, and other bedding products under the Sleep Number name. It also provides smart adjustable bases under the FlextFit brand, and smart beds under the Climate 360 name. The company sells its products directly to consumers through retail, online, phone, chat, and other. The company was formerly known as Select Comfort Corporation and changed its name to Sleep Number Corporation in November 2017. Sleep Number Corporation was incorporated in 1987 and is headquartered in Minneapolis, Minnesota.