Meritage Homes (NYSE:MTH) and Sleep Number (NASDAQ:SNBR) Head-To-Head Survey

Meritage Homes (NYSE:MTH) and Sleep Number (NASDAQ:SNBR) are both consumer discretionary companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, valuation, earnings, risk and analyst recommendations.

Profitability

This table compares Meritage Homes and Sleep Number’s 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%
Sleep Number	-12.98%	N/A	-16.48%

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Meritage Homes and Sleep Number, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Meritage Homes	2	7	4	0	2.15
Sleep Number	2	2	0	0	1.50

Meritage Homes currently has a consensus target price of $73.56, indicating a potential upside of 14.53%. Sleep Number has a consensus target price of $3.50, indicating a potential upside of 2,700.00%. Given Sleep Number’s higher probable upside, analysts plainly believe Sleep Number is more favorable than Meritage Homes.

Risk & Volatility

Meritage Homes has a beta of 1.33, suggesting that its stock price is 33% more volatile than the S&P 500. Comparatively, Sleep Number has a beta of 2.49, suggesting that its stock price is 149% more volatile than the S&P 500.

Earnings and Valuation

This table compares Meritage Homes and Sleep Number”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	13.44
Sleep Number	$1.34 billion	0.00	-$131.96 million	($7.56)	-0.02

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

Institutional & Insider Ownership

98.4% of Meritage Homes shares are owned by institutional investors. Comparatively, 85.7% of Sleep Number shares are owned by institutional investors. 2.5% of Meritage Homes shares are owned by company insiders. Comparatively, 3.6% of Sleep Number shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Summary

Meritage Homes beats Sleep Number on 11 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 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.