Purple Innovation (NASDAQ:PRPL) vs. Sonos (NASDAQ:SONO) Financial Analysis

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

Analyst Ratings

This is a summary of recent ratings for Purple Innovation and Sonos, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Purple Innovation	1	2	0	0	1.67
Sonos	0	3	2	0	2.40

Purple Innovation presently has a consensus price target of $16.25, indicating a potential upside of 469.18%. Sonos has a consensus price target of $20.00, indicating a potential upside of 16.13%. Given Purple Innovation’s higher probable upside, analysts plainly believe Purple Innovation is more favorable than Sonos.

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Purple Innovation	$468.73 million	0.03	-$51.41 million	($11.24)	-0.25
Sonos	$1.44 billion	1.41	-$61.14 million	$0.45	38.27

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

Insider & Institutional Ownership

88.4% of Purple Innovation shares are held by institutional investors. Comparatively, 85.8% of Sonos shares are held by institutional investors. 54.0% of Purple Innovation shares are held by company insiders. Comparatively, 1.3% of Sonos shares are held 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.

Profitability

This table compares Purple Innovation and Sonos’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Purple Innovation	-10.74%	N/A	-10.89%
Sonos	3.82%	19.10%	8.67%

Volatility and Risk

Purple Innovation has a beta of 1.43, meaning that its share price is 43% more volatile than the S&P 500. Comparatively, Sonos has a beta of 1.94, meaning that its share price is 94% more volatile than the S&P 500.

Summary

Sonos beats Purple Innovation on 10 of the 14 factors compared between the two stocks.

About Purple Innovation

Purple Innovation, Inc. designs and manufactures sleep and other products in the United States and internationally. The company offers mattresses, pillows, cushions, bases, sheets, platforms, adjustable bases, mattress protectors, foundations, blankets, duvets, duvet covers, seat cushions, and pet beds under the Purple brand. It markets and sells its products through its e-commerce online channels, retail brick-and-mortar wholesale partners, third-party online retailers, and Purple showrooms, as well as through its website, Purple.com. The company was founded in 2010 and is headquartered in Lehi, Utah.

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.