Meritage Homes (NYSE:MTH) & Sonos (NASDAQ:SONO) Head-To-Head Review

Meritage Homes (NYSE:MTH) and Sonos (NASDAQ:SONO) are both mid-cap consumer discretionary companies, but which is the superior stock? We will compare the two companies based on the strength of their profitability, valuation, dividends, earnings, institutional ownership, analyst recommendations and risk.

Institutional and Insider Ownership

98.4% of Meritage Homes shares are owned by institutional investors. Comparatively, 85.8% of Sonos shares are owned by institutional investors. 2.5% of Meritage Homes shares are owned by insiders. Comparatively, 1.3% of Sonos shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Meritage Homes and Sonos’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Meritage Homes	6.11%	7.13%	4.83%
Sonos	3.82%	19.10%	8.67%

Risk & Volatility

Meritage Homes has a beta of 1.35, meaning that its stock price is 35% more volatile than the S&P 500. Comparatively, Sonos has a beta of 1.93, meaning that its stock price is 93% more volatile than the S&P 500.

Valuation & Earnings

This table compares Meritage Homes and Sonos”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Meritage Homes	$5.86 billion	0.71	$453.01 million	$4.78	13.37
Sonos	$1.44 billion	1.46	-$61.14 million	$0.45	39.70

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

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Meritage Homes and Sonos, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Meritage Homes	0	8	4	0	2.33
Sonos	0	3	2	0	2.40

Meritage Homes currently has a consensus price target of $76.75, suggesting a potential upside of 20.09%. Sonos has a consensus price target of $20.00, suggesting a potential upside of 11.96%. Given Meritage Homes’ higher possible upside, research analysts plainly believe Meritage Homes is more favorable than Sonos.

Summary

Meritage Homes beats Sonos on 8 of the 14 factors compared between the two stocks.

About Meritage Homes

Meritage Homes Corporation, together with its subsidiaries, designs and builds single-family attached and detached homes in the United States. The company operates through two segments, Homebuilding and Financial Services. It acquires and develops land; and constructs, markets, and sells homes for entry-level and first move-up buyers in Arizona, California, Colorado, Utah, Texas, Florida, Georgia, North Carolina, South Carolina, and Tennessee. The company also offers title and escrow, mortgage, insurance, and closing/settlement services to its homebuyers. Meritage Homes Corporation was founded in 1985 and is based in Scottsdale, Arizona.

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.