Critical Review: Sonos (SONO) & Its Rivals

Sonos (NASDAQ:SONO) is one of 149 publicly-traded companies in the “Household Durables” industry, but how does it compare to its rivals? We will compare Sonos to similar companies based on the strength of its valuation, analyst recommendations, profitability, risk, institutional ownership, dividends and earnings.

Insider & Institutional Ownership

85.8% of Sonos shares are owned by institutional investors. Comparatively, 53.7% of shares of all “Household Durables” companies are owned by institutional investors. 1.3% of Sonos shares are owned by company insiders. Comparatively, 18.5% of shares of all “Household Durables” companies are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Sonos and its rivals, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sonos	0	3	2	0	2.40
Sonos Competitors	1734	7280	8056	301	2.40

Sonos presently has a consensus target price of $20.00, suggesting a potential upside of 31.98%. As a group, “Household Durables” companies have a potential upside of 46.71%. Given Sonos’ rivals higher probable upside, analysts clearly believe Sonos has less favorable growth aspects than its rivals.

Earnings & Valuation

This table compares Sonos and its rivals top-line revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Sonos	$1.44 billion	-$61.14 million	33.68
Sonos Competitors	$127.77 billion	$322.40 million	14.72

Sonos’ rivals have higher revenue and earnings than Sonos. Sonos is trading at a higher price-to-earnings ratio than its rivals, indicating that it is currently more expensive than other companies in its industry.

Profitability

This table compares Sonos and its rivals’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sonos	3.82%	19.10%	8.67%
Sonos Competitors	-21.29%	-17.54%	1.12%

Risk & Volatility

Sonos has a beta of 1.95, meaning that its stock price is 95% more volatile than the S&P 500. Comparatively, Sonos’ rivals have a beta of 1.74, meaning that their average stock price is 74% more volatile than the S&P 500.

Summary

Sonos beats its rivals on 7 of the 13 factors compared.

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.