Sleep Number (NASDAQ: SNBR) and Compass Diversified (NYSE:CODI) are both small-cap consumer discretionary companies, but which is the better stock? We will contrast the two companies based on the strength of their valuation, analyst recommendations, risk, earnings, institutional ownership, profitability and dividends.
Volatility and Risk
Sleep Number has a beta of 0.84, meaning that its share price is 16% less volatile than the S&P 500. Comparatively, Compass Diversified has a beta of 0.47, meaning that its share price is 53% less volatile than the S&P 500.
This table compares Sleep Number and Compass Diversified’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Valuation & Earnings
This table compares Sleep Number and Compass Diversified’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Sleep Number||$1.44 billion||0.73||$65.07 million||$1.49||19.05|
|Compass Diversified||$1.27 billion||0.74||$27.99 million||N/A||N/A|
Sleep Number has higher revenue and earnings than Compass Diversified.
Insider & Institutional Ownership
36.7% of Compass Diversified shares are held by institutional investors. 4.3% of Sleep Number shares are held by insiders. Comparatively, 3.4% of Compass Diversified shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.
Compass Diversified pays an annual dividend of $1.44 per share and has a dividend yield of 9.2%. Sleep Number does not pay a dividend.
This is a breakdown of current recommendations for Sleep Number and Compass Diversified, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Sleep Number presently has a consensus target price of $31.29, indicating a potential upside of 10.24%. Compass Diversified has a consensus target price of $20.00, indicating a potential upside of 27.39%. Given Compass Diversified’s stronger consensus rating and higher probable upside, analysts clearly believe Compass Diversified is more favorable than Sleep Number.
Sleep Number beats Compass Diversified on 8 of the 14 factors compared between the two stocks.
Sleep Number Company Profile
Sleep Number Corporation, together with its subsidiaries, provides sleep solutions and services in the United States. It designs, manufactures, markets, retails, and services beds, bases, and bedding accessories under the Sleep Number name. The company also offers adjustable bases under the FlextFit name; and pillows and sheets, as well as other bedding products, including mattresses, box springs, and foundations under the Sleep Number name. The company sells its products directly to consumers through retail, online, and phone, as well as through wholesale. As of December 30, 2017, it operated approximately 556 Sleep Number retail stores in 50 states. The company was formerly known as Select Comfort Corporation and changed its name to Sleep Number Corporation in November 2017. Sleep Number Corporation was founded in 1987 and is headquartered in Minneapolis, Minnesota.
Compass Diversified Company Profile
Compass Diversified Holdings LLC is a private equity firm specializing in acquisitions, buyouts, industry consolidation, recapitalization, and middle market investments. It seeks to invest in niche industrial or branded consumer companies, manufacturing, distribution, consumer products, and business services sectors. The firm prefers to invest in companies based in North America. It seeks to invest between $100 million and $500 million in transaction size between $4 million and $500 million in companies with cash flows between $10 million and $450 million, enterprise values between $100 million and $500 million, and an EBITDA between $5 million and $75 million. It seeks to acquire controlling ownership interests in its portfolio companies and can also make additional platform acquisitions. The firm prefer to have majority stake in companies. The firm invests through its balance sheet and typically holds investments between five to seven years. Compass Group Management LLC is the external manager of the Compass Diversified Holdings LLC and manages day-to-day business and operations of firm. Compass Diversified Holdings LLC was founded in 2005 and is based in Westport, Connecticut with an additional office in Irvine, California.
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