Comparing Sonos (NASDAQ:SONO) & KB Home (NYSE:KBH)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
KB Home	4.94%	7.67%	4.37%
Sonos	3.82%	19.10%	8.67%

Valuation & Earnings

This table compares KB Home and Sonos”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
KB Home	$6.24 billion	0.52	$428.79 million	$2.87	18.55
Sonos	$1.44 billion	1.28	-$61.14 million	$0.45	34.67

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.

Analyst Recommendations

This is a summary of current recommendations for KB Home and Sonos, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
KB Home	1	11	4	0	2.19
Sonos	0	3	2	0	2.40

KB Home presently has a consensus price target of $60.17, indicating a potential upside of 13.01%. Sonos has a consensus price target of $20.00, indicating a potential upside of 28.21%. Given Sonos’ stronger consensus rating and higher probable upside, analysts clearly believe Sonos is more favorable than KB Home.

Insider & Institutional Ownership

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

Risk and Volatility

KB Home has a beta of 1.35, indicating that its share price is 35% more volatile than the S&P 500. Comparatively, Sonos has a beta of 1.95, indicating that its share price is 95% more volatile than the S&P 500.

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.

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.