Analyzing Sonos (NASDAQ:SONO) and Meritage Homes (NYSE:MTH)

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

Earnings & Valuation

This table compares Meritage Homes and Sonos”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Meritage Homes	$5.40 billion	0.75	$453.01 million	$4.78	13.06
Sonos	$1.44 billion	1.47	-$61.14 million	$0.45	39.87

Meritage Homes has higher revenue and earnings than Sonos. Meritage Homes 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 current recommendations and price targets for Meritage Homes and Sonos, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Meritage Homes	0	8	4	0	2.33
Sonos	0	3	2	0	2.40

Meritage Homes currently has a consensus price target of $76.75, indicating a potential upside of 22.99%. Sonos has a consensus price target of $20.00, indicating a potential upside of 11.48%. Given Meritage Homes’ higher probable upside, research analysts plainly believe Meritage Homes is more favorable than Sonos.

Risk & Volatility

Meritage Homes has a beta of 1.33, suggesting that its share price is 33% more volatile than the S&P 500. Comparatively, Sonos has a beta of 1.88, suggesting that its share price is 88% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Meritage Homes	6.11%	7.13%	4.83%
Sonos	3.82%	19.10%	8.67%

Insider & Institutional Ownership

98.4% of Meritage Homes shares are held by institutional investors. Comparatively, 85.8% of Sonos shares are held by institutional investors. 2.5% of Meritage Homes shares are held by insiders. Comparatively, 1.3% of Sonos shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

Meritage Homes beats Sonos on 8 of the 14 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 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.