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

Institutional and Insider Ownership

29.1% of Stanley Furniture shares are held by institutional investors. 28.6% of Stanley Furniture shares are held by insiders. Comparatively, 4.0% of Sleep Number shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Stanley Furniture and Sleep Number’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Stanley Furniture -2.34% -10.31% -5.70%
Sleep Number 4.34% 51.12% 14.26%

Valuation and Earnings

This table compares Stanley Furniture and Sleep Number’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Stanley Furniture $44.57 million 0.28 -$5.25 million ($0.07) -11.86
Sleep Number $1.31 billion 1.14 $51.41 million $1.41 26.62

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

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Stanley Furniture and Sleep Number, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Stanley Furniture 0 0 0 0 N/A
Sleep Number 1 3 3 0 2.29

Sleep Number has a consensus target price of $33.40, indicating a potential downside of 11.03%. Given Sleep Number’s higher possible upside, analysts plainly believe Sleep Number is more favorable than Stanley Furniture.

Volatility & Risk

Stanley Furniture has a beta of 0.21, meaning that its stock price is 79% less volatile than the S&P 500. Comparatively, Sleep Number has a beta of 0.61, meaning that its stock price is 39% less volatile than the S&P 500.

Summary

Sleep Number beats Stanley Furniture on 10 of the 12 factors compared between the two stocks.

Stanley Furniture Company Profile

Stanley Furniture Company, Inc. is a design, marketing and sourcing resource in the wood residential furniture market. The Company’s segment is sale of residential wood furniture products. The Company markets its brands through a network of brick-and-mortar furniture retailers, online retailers and interior designers around the world. The Company’s products are marketed under the Stanley Furniture brand, but also under sub-brands, including Coastal Living and Stone & Leigh. The Company’s products are marketed as wood residential home furnishings and include a range of offerings for the home, including dining, bedroom, living room, home office, home entertainment, accent items, and nursery and youth furniture. The Company provides products in a range of wood species and finishes. The Company’s product is sourced from independently owned factories in Southeast Asia, primarily in Vietnam.

Sleep Number Company Profile

Sleep Number Corporation, formerly Select Comfort Corporation, is a designer, manufacturer, marketer, retailer and servicer of a line of Sleep Number beds. The Company offers consumers individualized sleep solutions and services, which include a complete line of Sleep Number beds, bases and bedding accessories. Its Sleep Number bed offers SleepIQ technology sensors that work directly with the bed’s DualAir technology to track each individual’s sleep. The Sleep Number bedding collection comprises a line of sleep products that are designed to solve sleep issues. It offers FlextFit adjustable bases, and Sleep Number pillows, sheets and other bedding products. It offers Sleep Number beds in ranges within the mattress category, and in a range of sizes, including twin, full, queen, eastern king and California king. It also offers an assortment of temperature-balancing products.

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