Those holding Sleep Number Corporation (NASDAQ:SNBR) shares would be relieved that the share price has rebounded 28% in the last thirty days, but it needs to keep going to repair the recent damage it has caused to investor portfolios. Unfortunately, the gains of the last month did little to right the losses of the last year with the stock still down 49% over that time.
In spite of the firm bounce in price, it's still not a stretch to say that Sleep Number's price-to-sales (or "P/S") ratio of 0.2x right now seems quite "middle-of-the-road" compared to the Specialty Retail industry in the United States, where the median P/S ratio is around 0.4x. Although, it's not wise to simply ignore the P/S without explanation as investors may be disregarding a distinct opportunity or a costly mistake.
How Has Sleep Number Performed Recently?
While the industry has experienced revenue growth lately, Sleep Number's revenue has gone into reverse gear, which is not great. Perhaps the market is expecting its poor revenue performance to improve, keeping the P/S from dropping. If not, then existing shareholders may be a little nervous about the viability of the share price.
If you'd like to see what analysts are forecasting going forward, you should check out our free report on Sleep Number.
What Are Revenue Growth Metrics Telling Us About The P/S?
In order to justify its P/S ratio, Sleep Number would need to produce growth that's similar to the industry.
In reviewing the last year of financials, we were disheartened to see the company's revenues fell to the tune of 12%. This means it has also seen a slide in revenue over the longer-term as revenue is down 17% in total over the last three years. Accordingly, shareholders would have felt downbeat about the medium-term rates of revenue growth.
Turning to the outlook, the next three years should generate growth of 2.2% per year as estimated by the five analysts watching the company. With the industry predicted to deliver 5.5% growth each year, the company is positioned for a weaker revenue result.
With this information, we find it interesting that Sleep Number is trading at a fairly similar P/S compared to the industry. Apparently many investors in the company are less bearish than analysts indicate and aren't willing to let go of their stock right now. These shareholders may be setting themselves up for future disappointment if the P/S falls to levels more in line with the growth outlook.
The Bottom Line On Sleep Number's P/S
Sleep Number's stock has a lot of momentum behind it lately, which has brought its P/S level with the rest of the industry. While the price-to-sales ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of revenue expectations.
Given that Sleep Number's revenue growth projections are relatively subdued in comparison to the wider industry, it comes as a surprise to see it trading at its current P/S ratio. When we see companies with a relatively weaker revenue outlook compared to the industry, we suspect the share price is at risk of declining, sending the moderate P/S lower. A positive change is needed in order to justify the current price-to-sales ratio.
Before you settle on your opinion, we've discovered 3 warning signs for Sleep Number (2 make us uncomfortable!) that you should be aware of.
Of course, profitable companies with a history of great earnings growth are generally safer bets. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.
Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
持有 Sleep Number Corporation (納斯達克:SNBR) 股票的人會鬆一口氣,因爲股價在過去三十天內反彈了28%,但仍需進一步回升,以修復最近造成的投資者組合損失。不幸的是,過去一個月的收益對於過去一年的虧損狀況並沒有太大幫助,該股票在該期間下跌了49%。
儘管價格有所反彈,但仍然可以說,Sleep Number 目前的市銷率(P/S)爲0.2倍,似乎與美國專業零售行業的中位數市銷率(約爲0.4倍)相比,仍然相當「中庸」。儘管如此,不明確解釋並不明智,因爲投資者可能會忽略一個獨特的機會或一個代價高昂的錯誤。
Sleep Number 近期表現如何?
雖然行業最近出現了收入增長,而 Sleep Number 的收入卻出現了逆轉,這不是很好的現象。也許市場預計它的差劣收入表現會得到改善,從而避免市銷率下降。如果不是這樣,那麼現有的股東可能會對股價的可行性有些不安。
如果您想查看分析師對 Sleep Number 的未來預測,可以查看我們關於 Sleep Number 的免費報告。