Critical Comparison: Cavco Industries (NASDAQ:CVCO) and Sleep Number (NASDAQ:SNBR)

Sleep Number (NASDAQ:SNBR) and Cavco Industries (NASDAQ:CVCO) are both consumer discretionary companies, but which is the superior stock? We will compare the two companies based on the strength of their dividends, earnings, risk, valuation, analyst recommendations, profitability and institutional ownership.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Sleep Number and Cavco Industries, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sleep Number	2	2	0	0	1.50
Cavco Industries	1	2	1	1	2.40

Sleep Number currently has a consensus target price of $3.50, indicating a potential upside of 2,700.00%. Cavco Industries has a consensus target price of $700.00, indicating a potential upside of 32.17%. Given Sleep Number’s higher possible upside, equities research analysts plainly believe Sleep Number is more favorable than Cavco Industries.

Institutional and Insider Ownership

85.7% of Sleep Number shares are owned by institutional investors. Comparatively, 95.6% of Cavco Industries shares are owned by institutional investors. 3.6% of Sleep Number shares are owned by insiders. Comparatively, 1.7% of Cavco Industries shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Risk and Volatility

Sleep Number has a beta of 2.49, meaning that its share price is 149% more volatile than the S&P 500. Comparatively, Cavco Industries has a beta of 1.28, meaning that its share price is 28% more volatile than the S&P 500.

Profitability

This table compares Sleep Number and Cavco Industries’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sleep Number	-12.98%	N/A	-16.48%
Cavco Industries	7.89%	16.51%	12.17%

Valuation & Earnings

This table compares Sleep Number and Cavco Industries”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sleep Number	$1.34 billion	0.00	-$131.96 million	($7.56)	-0.02
Cavco Industries	$2.24 billion	1.81	$190.55 million	$22.98	23.05

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

Summary

Cavco Industries beats Sleep Number on 12 of the 15 factors compared between the two stocks.

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.

About Cavco Industries

Cavco Industries, Inc. designs, produces, and retails factory-built homes primarily in the United States. It operates in two segments, Factory-Built Housing and Financial Services. The company markets its factory-built homes under the Cavco, Fleetwood, Palm Harbor, Nationwide, Fairmont, Friendship, Chariot Eagle, Destiny, Commodore, Colony, Pennwest, R-Anell, Manorwood, MidCountry, and Solitaire brands. It produces park model RVs; vacation cabins; and factory-built commercial structures, including apartment buildings, condominiums, hotels, workforce housing, schools, and housing for the United States military troops. In addition, the company produces various modular homes, which include single and multi-section ranch, split-level, and Cape Cod style homes, as well as two- and three-story homes, and multi-family units. Further, it provides conforming and non-conforming mortgages and home-only loans to purchasers of various brands of factory-built homes sold by company-owned retail stores, as well as various independent distributors, builders, communities, and developers. Additionally, the company offers property and casualty insurance to owners of manufactured homes. It distributes its products through a network of independent and company-owned retailers, planned community operators, and residential developers. Cavco Industries, Inc. was founded in 1965 and is headquartered in Phoenix, Arizona.