Critical Survey: Cricut (NASDAQ:CRCT) & Sonos (NASDAQ:SONO)

Cricut (NASDAQ:CRCT) and Sonos (NASDAQ:SONO) are both small-cap consumer discretionary companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, dividends, earnings, institutional ownership, risk and profitability.

Volatility and Risk

Cricut has a beta of 0.19, meaning that its share price is 81% less volatile than the S&P 500. Comparatively, Sonos has a beta of 1.95, meaning that its share price is 95% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings for Cricut and Sonos, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cricut	4	1	0	1	1.67
Sonos	0	3	2	0	2.40

Cricut currently has a consensus price target of $4.07, suggesting a potential downside of 25.11%. Sonos has a consensus price target of $20.00, suggesting a potential upside of 22.85%. Given Sonos’ stronger consensus rating and higher possible upside, analysts clearly believe Sonos is more favorable than Cricut.

Valuation and Earnings

This table compares Cricut and Sonos”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cricut	$708.78 million	1.60	$76.71 million	$0.43	12.63
Sonos	$1.44 billion	1.33	-$61.14 million	$0.45	36.18

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

Institutional & Insider Ownership

19.6% of Cricut shares are held by institutional investors. Comparatively, 85.8% of Sonos shares are held by institutional investors. 16.5% of Cricut shares are held by company insiders. Comparatively, 1.3% of Sonos shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Cricut	12.71%	24.57%	15.42%
Sonos	3.82%	19.10%	8.67%

Summary

Sonos beats Cricut on 8 of the 15 factors compared between the two stocks.

About Cricut

Cricut, Inc. engages in the design, marketing, and distribution of a creativity platform that enables users to turn ideas into professional-looking handmade goods. It operates through three segments: Connected Machines, Subscriptions, and Accessories and Materials. The company offers connected machines, design apps, and accessories and materials for users to create personalized birthday cards, mugs, T-shirts, and large-scale interior decorations. Its connected machines include Cricut Joy family for personalization, organization, and customization; Cricut Explore family for cutting, writing, and scoring; Cricut Maker family for cutting, writing, scoring, and adding decorative effects to various materials, such as paper, vinyl, iron-on vinyl, pens, and others; and Cricut Venture for cutting, writing, and scoring large-format projects at professional speeds. The company also provides Cricut Access and Cricut Access Premium subscription offerings, and in-app purchases; and a software that integrates its connected machines and design apps comprising Cricut Joy App, Design Space, and other design apps. In addition, it offers a range of accessories and materials, such as Cricut EasyPress, Cricut Mug Press, hand tools, machine replacement tools and blades, and project materials. The company offers its products through its third-party brick-and-mortar and online retail partners; and its website cricut.com, as well as through a network of distributors. It operates in the United States, Canada, the United Kingdom, Ireland, Australia, New Zealand, and Western Europe, as well as the Middle East, Latin America, South Africa, and Asia. The company was formerly known as Provo Craft & Novelty, Inc. and changed its name to Cricut, Inc. in March 2018. The company was incorporated in 1969 and is headquartered in South Jordan, 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.