Head to Head Contrast: Sonos (NASDAQ:SONO) versus KB Home (NYSE:KBH)

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

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Sonos and KB Home, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sonos	0	3	2	0	2.40
KB Home	1	10	4	0	2.20

Sonos currently has a consensus target price of $20.00, suggesting a potential upside of 30.21%. KB Home has a consensus target price of $60.17, suggesting a potential upside of 15.09%. Given Sonos’ stronger consensus rating and higher possible upside, research analysts clearly believe Sonos is more favorable than KB Home.

Valuation & Earnings

This table compares Sonos and KB Home”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sonos	$1.49 billion	1.22	-$61.14 million	$0.45	34.13
KB Home	$5.50 billion	0.58	$428.79 million	$2.87	18.22

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

Risk and Volatility

Sonos has a beta of 1.93, suggesting that its share price is 93% more volatile than the S&P 500. Comparatively, KB Home has a beta of 1.34, suggesting that its share price is 34% more volatile than the S&P 500.

Profitability

This table compares Sonos and KB Home’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%
KB Home	4.94%	7.67%	4.37%

Insider & Institutional Ownership

85.8% of Sonos shares are owned by institutional investors. Comparatively, 96.1% of KB Home shares are owned by institutional investors. 1.3% of Sonos shares are owned by insiders. Comparatively, 4.7% of KB Home shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

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 KB Home

KB Home operates as a homebuilding company in the United States. It operates through four segments: West Coast, Southwest, Central, and Southeast. It builds and sells various homes, including attached and detached single-family residential homes, townhomes, and condominiums primarily for first-time, first move-up, second move-up, and active adult homebuyers. The company also provides financial services, such as insurance products and title services, as well as mortgage banking services, including residential consumer mortgage loans to homebuyers. It has operations in Arizona, California, Colorado, Florida, Idaho, Nevada, North Carolina, Texas, and Washington. The company was formerly known as Kaufman and Broad Home Corporation and changed its name to KB Home in January 2001. KB Home was founded in 1957 and is based in Los Angeles, California.