Critical Review: NVR (NYSE:NVR) vs. Sonos (NASDAQ:SONO)

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

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sonos	$1.44 billion	1.46	-$61.14 million	$0.45	39.47
NVR	$9.34 billion	1.63	$1.34 billion	$362.71	15.72

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

Institutional and Insider Ownership

85.8% of Sonos shares are owned by institutional investors. Comparatively, 83.7% of NVR shares are owned by institutional investors. 1.3% of Sonos shares are owned by company insiders. Comparatively, 8.6% of NVR shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Volatility & Risk

Sonos has a beta of 1.88, indicating that its share price is 88% more volatile than the S&P 500. Comparatively, NVR has a beta of 0.9, indicating that its share price is 10% less volatile than the S&P 500.

Profitability

This table compares Sonos and NVR’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%
NVR	11.51%	29.23%	18.58%

Analyst Ratings

This is a breakdown of current recommendations for Sonos and NVR, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sonos	0	3	2	0	2.40
NVR	3	3	2	0	1.88

Sonos presently has a consensus target price of $20.00, suggesting a potential upside of 12.61%. NVR has a consensus target price of $6,597.17, suggesting a potential upside of 15.68%. Given NVR’s higher possible upside, analysts clearly believe NVR is more favorable than Sonos.

Summary

NVR beats Sonos on 9 of the 13 factors compared between the two stocks.

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 NVR

NVR, Inc. operates as a homebuilder in the United States. The company operates through, Homebuilding and Mortgage Banking segments. It engages in the construction and sale of single-family detached homes, townhomes, and condominium buildings under the Ryan Homes, NVHomes, and Heartland Homes names. The company markets its Ryan Homes products to first-time and first-time move-up buyers; and NVHomes and Heartland Homes products to move-up and luxury buyers. It also provides various mortgage related services to its homebuilding customers, as well as brokers title insurance; performs title searches in connection with mortgage loan closings; and sells mortgage loans to investors in the secondary markets on a servicing released basis. The company primarily serves in Maryland, Virginia, West Virginia, Delaware, New Jersey, Eastern Pennsylvania, New York, Ohio, Western Pennsylvania, Indiana, Illinois, North Carolina, Georgia, South Carolina, Florida, Tennessee, and Washington, D.C. NVR, Inc. was founded in 1980 and is headquartered in Reston, Virginia.