Analyzing Garmin (NYSE:GRMN) & Sonos (NASDAQ:SONO)

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

Risk and Volatility

Garmin has a beta of 0.85, suggesting that its share price is 15% less volatile than the S&P 500. Comparatively, Sonos has a beta of 1.93, suggesting that its share price is 93% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Garmin and Sonos, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Garmin	0	4	2	2	2.75
Sonos	0	3	2	0	2.40

Garmin presently has a consensus target price of $310.17, indicating a potential upside of 13.20%. Sonos has a consensus target price of $20.00, indicating a potential upside of 28.78%. Given Sonos’ higher possible upside, analysts clearly believe Sonos is more favorable than Garmin.

Insider & Institutional Ownership

81.6% of Garmin shares are owned by institutional investors. Comparatively, 85.8% of Sonos shares are owned by institutional investors. 14.8% of Garmin shares are owned by company insiders. Comparatively, 1.3% of Sonos shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Garmin	$7.25 billion	7.29	$1.66 billion	$9.70	28.25
Sonos	$1.44 billion	1.27	-$61.14 million	$0.45	34.51

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Garmin	24.47%	20.95%	17.06%
Sonos	3.82%	19.10%	8.67%

Summary

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

About Garmin

Garmin Ltd. designs, develops, manufactures, markets, and distributes a range of wireless devices worldwide. Its Fitness segment offers running and multi-sport watches; cycling products; smartwatch devices; scales and monitors; and fitness accessories. This segment also provides Garmin Connect and Garmin Connect Mobile, which are web and mobile platforms where users can track and analyze their fitness, activities and workouts, and wellness data; and Connect IQ, an application development platform. The company's Outdoor segment offers adventure watches, outdoor handhelds and satellite communicators, golf devices, consumer automotive devices, and dog devices, as well as InReach and Gramin response communication device. Its Aviation segment designs, manufactures, and markets various aircraft avionics solutions, including integrated flight decks, electronic flight displays and instrumentation, navigation and communication products, automatic flight control systems and safety-enhancing technologies, audio control systems, engine indication systems, traffic awareness and avoidance solutions, ADS-B and transponders, weather information and avoidance solutions, datalink and connectivity solutions, and various services. The company's Marine segment provides chartplotters and multi-function displays, cartography products, fishfinders, sonar products, autopilot systems, radars, compliant instrument displays and sensors, VHF communication radios, handhelds and wearable devices, sailing products, audio products and accessories, digital switching products, and trolling motors. Its Auto segment offers embedded domain controllers and infotainment units; and software, map database, cameras, wearables, and automotive solutions. The company sells its products through independent retailers, dealers, distributors, installation and repair shops, and original equipment manufacturers, as well as online webshop. Garmin Ltd. was founded in 1989 and is based in Schaffhausen, Switzerland.

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.