Ethan Allen Interiors (ETH) versus Sleep Number (SNBR) Head to Head Review

Ethan Allen Interiors (NYSE: ETH) and Sleep Number (NASDAQ:SNBR) are both small-cap cyclical consumer goods & services companies, but which is the superior stock? We will contrast the two companies based on the strength of their institutional ownership, profitability, analyst recommendations, risk, dividends, earnings and valuation.

Analyst Ratings

This is a summary of current ratings and target prices for Ethan Allen Interiors and Sleep Number, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ethan Allen Interiors 0 2 2 1 2.80
Sleep Number 1 3 3 0 2.29

Ethan Allen Interiors currently has a consensus price target of $33.50, indicating a potential upside of 16.12%. Sleep Number has a consensus price target of $33.40, indicating a potential downside of 11.69%. Given Ethan Allen Interiors’ stronger consensus rating and higher probable upside, equities research analysts clearly believe Ethan Allen Interiors is more favorable than Sleep Number.

Profitability

This table compares Ethan Allen Interiors and Sleep Number’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ethan Allen Interiors 4.27% 9.11% 6.39%
Sleep Number 4.34% 51.12% 14.26%

Insider & Institutional Ownership

99.4% of Ethan Allen Interiors shares are held by institutional investors. 10.5% of Ethan Allen Interiors shares are held by insiders. Comparatively, 4.0% of Sleep Number shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Dividends

Ethan Allen Interiors pays an annual dividend of $0.76 per share and has a dividend yield of 2.6%. Sleep Number does not pay a dividend. Ethan Allen Interiors pays out 66.1% of its earnings in the form of a dividend. Ethan Allen Interiors has raised its dividend for 6 consecutive years.

Earnings and Valuation

This table compares Ethan Allen Interiors and Sleep Number’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ethan Allen Interiors $763.39 million 1.04 $36.19 million $1.15 25.09
Sleep Number $1.31 billion 1.15 $51.41 million $1.41 26.82

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

Risk and Volatility

Ethan Allen Interiors has a beta of 1.41, suggesting that its stock price is 41% more volatile than the S&P 500. Comparatively, Sleep Number has a beta of 0.61, suggesting that its stock price is 39% less volatile than the S&P 500.

Summary

Sleep Number beats Ethan Allen Interiors on 10 of the 18 factors compared between the two stocks.

About Ethan Allen Interiors

Ethan Allen Interiors Inc. is an interior design company. The Company is a manufacturer and retailer of home furnishings. The Company operates through two segments, which include wholesale and retail. The Company is an international home fashion brand doing business in North America, Europe, Asia and the Middle East. It offers complimentary interior design service to its clients and sells a range of furniture products and decorative accents through ethanallen.com and a network of design centers in the United States and abroad. Its wholesale segment, principally involved in the development of the Ethan Allen brand, encompasses various aspects of design, manufacture, sourcing, sale, and distribution of its range of home furnishings and accents. The Company’s retail segment sells home furnishings and accents to consumers through a network of Company-operated design centers. As of June 30, 2016, the Company owned and operated nine manufacturing facilities.

About Sleep Number

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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