Critical Survey: Champion Homes (NYSE:SKY) and Sleep Number (NASDAQ:SNBR)

Champion Homes (NYSE:SKY) and Sleep Number (NASDAQ:SNBR) are both consumer discretionary companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, institutional ownership, profitability, risk, valuation and earnings.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Champion Homes and Sleep Number, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Champion Homes	0	2	5	1	2.88
Sleep Number	2	2	0	0	1.50

Champion Homes presently has a consensus price target of $104.00, indicating a potential upside of 22.05%. Sleep Number has a consensus price target of $3.50, indicating a potential upside of 2,700.00%. Given Sleep Number’s higher probable upside, analysts plainly believe Sleep Number is more favorable than Champion Homes.

Valuation & Earnings

This table compares Champion Homes and Sleep Number”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Champion Homes	$2.66 billion	1.74	$206.90 million	$3.43	24.84
Sleep Number	$1.34 billion	0.00	-$131.96 million	($7.56)	-0.02

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

Profitability

This table compares Champion Homes and Sleep Number’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Champion Homes	7.16%	12.52%	9.29%
Sleep Number	-12.98%	N/A	-16.48%

Insider and Institutional Ownership

85.7% of Sleep Number shares are owned by institutional investors. 0.6% of Champion Homes shares are owned by company insiders. Comparatively, 3.6% of Sleep Number shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Risk and Volatility

Champion Homes has a beta of 1.01, meaning that its stock price is 1% more volatile than the S&P 500. Comparatively, Sleep Number has a beta of 2.49, meaning that its stock price is 149% more volatile than the S&P 500.

Summary

Champion Homes beats Sleep Number on 11 of the 15 factors compared between the two stocks.

About Champion Homes

Skyline Champion Corporation produces and sells factory-built housing in North America. The company offers manufactured and modular homes, park models RVs, accessory dwelling units, and modular buildings for the multi-family and hospitality sectors. It builds homes under the Skyline Homes, Champion Home Builders, Genesis Homes, Athens Park Models, Dutch Housing, Atlantic Homes, Excel Homes, Homes of Merit, New Era, Redman Homes, ScotBilt Homes, Shore Park, Silvercrest, and Titan Homes brands in the United States; and Moduline and SRI Homes brand names in western Canada. The company also provides construction services to install and set-up factory-built homes; operates a factory-direct manufactured home retail business under the Titan Factory Direct and Champion Homes Center brand names with 31 sales centers in the United States; and engages in the transportation of manufactured homes and recreational vehicles. The company was founded in 2010 and is headquartered in Troy, Michigan.

About Sleep Number

Sleep Number Corporation, together with its subsidiaries, offers sleep solutions and services in the United States. The company designs, manufactures, markets, retails, and services beds, pillows, sheets, and other bedding products under the Sleep Number name. It also provides smart adjustable bases under the FlextFit brand, and smart beds under the Climate 360 name. The company sells its products directly to consumers through retail, online, phone, chat, and other. The company was formerly known as Select Comfort Corporation and changed its name to Sleep Number Corporation in November 2017. Sleep Number Corporation was incorporated in 1987 and is headquartered in Minneapolis, Minnesota.