Analyzing Sleep Number (NASDAQ:SNBR) and Meritage Homes (NYSE:MTH)

Meritage Homes (NYSE:MTH) and Sleep Number (NASDAQ:SNBR) are both consumer discretionary companies, but which is the superior stock? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, risk, earnings, valuation and analyst recommendations.

Institutional & Insider Ownership

98.4% of Meritage Homes shares are held by institutional investors. Comparatively, 85.7% of Sleep Number shares are held by institutional investors. 2.5% of Meritage Homes shares are held by insiders. Comparatively, 3.6% of Sleep Number shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Meritage Homes and Sleep Number’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Meritage Homes	N/A	N/A	N/A
Sleep Number	-12.98%	N/A	-16.48%

Valuation & Earnings

This table compares Meritage Homes 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
Meritage Homes	N/A	N/A	N/A	$4.78	13.36
Sleep Number	$1.34 billion	0.00	-$131.96 million	($7.56)	-0.02

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

Analyst Recommendations

This is a summary of recent recommendations for Meritage Homes and Sleep Number, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Meritage Homes	2	7	4	0	2.15
Sleep Number	2	2	0	0	1.50

Meritage Homes presently has a consensus price target of $73.56, indicating a potential upside of 15.21%. Sleep Number has a consensus price target of $3.50, indicating a potential upside of 2,700.00%. Given Sleep Number’s higher probable upside, analysts plainly believe Sleep Number is more favorable than Meritage Homes.

Summary

Meritage Homes beats Sleep Number on 7 of the 10 factors compared between the two stocks.

About Meritage Homes

Meritage Homes Corporation, together with its subsidiaries, designs and builds single-family attached and detached homes in the United States. The company operates through two segments, Homebuilding and Financial Services. It acquires and develops land; and constructs, markets, and sells homes for entry-level and first move-up buyers in Arizona, California, Colorado, Utah, Texas, Florida, Georgia, North Carolina, South Carolina, and Tennessee. The company also offers title and escrow, mortgage, insurance, and closing/settlement services to its homebuyers. Meritage Homes Corporation was founded in 1985 and is based in Scottsdale, Arizona.

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.