Reviewing NVR (NYSE:NVR) & Sonos (NASDAQ:SONO)

Sonos (NASDAQ:SONO) and NVR (NYSE:NVR) are both consumer discretionary companies, but which is the superior investment? We will compare the two businesses based on the strength of their risk, earnings, profitability, dividends, analyst recommendations, valuation and institutional ownership.

Volatility and Risk

Sonos has a beta of 1.88, indicating that its stock price is 88% more volatile than the S&P 500. Comparatively, NVR has a beta of 0.9, indicating that its stock price is 10% less volatile than the S&P 500.

Valuation and Earnings

This table compares Sonos and NVR”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sonos	$1.49 billion	1.26	-$61.14 million	$0.45	35.38
NVR	$10.09 billion	1.61	$1.34 billion	$362.71	16.81

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

Analyst Recommendations

This is a summary of recent ratings and price targets for Sonos and NVR, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sonos	0	3	2	0	2.40
NVR	3	3	2	0	1.88

Sonos presently has a consensus price target of $20.00, indicating a potential upside of 25.63%. NVR has a consensus price target of $6,597.17, indicating a potential upside of 8.17%. Given Sonos’ stronger consensus rating and higher possible upside, research analysts clearly believe Sonos is more favorable than NVR.

Profitability

This table compares Sonos and NVR’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%
NVR	11.51%	29.23%	18.58%

Institutional & Insider Ownership

85.8% of Sonos shares are owned by institutional investors. Comparatively, 83.7% of NVR shares are owned by institutional investors. 1.3% of Sonos shares are owned by insiders. Comparatively, 8.6% of NVR shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

NVR beats Sonos on 8 of the 13 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 NVR

NVR, Inc. operates as a homebuilder in the United States. The company operates through, Homebuilding and Mortgage Banking segments. It engages in the construction and sale of single-family detached homes, townhomes, and condominium buildings under the Ryan Homes, NVHomes, and Heartland Homes names. The company markets its Ryan Homes products to first-time and first-time move-up buyers; and NVHomes and Heartland Homes products to move-up and luxury buyers. It also provides various mortgage related services to its homebuilding customers, as well as brokers title insurance; performs title searches in connection with mortgage loan closings; and sells mortgage loans to investors in the secondary markets on a servicing released basis. The company primarily serves in Maryland, Virginia, West Virginia, Delaware, New Jersey, Eastern Pennsylvania, New York, Ohio, Western Pennsylvania, Indiana, Illinois, North Carolina, Georgia, South Carolina, Florida, Tennessee, and Washington, D.C. NVR, Inc. was founded in 1980 and is headquartered in Reston, Virginia.