What’s Happening With Sonos Stock?
Sonos stock (NASDAQ:SONO) has rallied by around 15% over the last week (five trading days) The rally comes as the company reported a stronger than expected set of Q3 FY’21 results as demand for home audio and home theater products continued to remain strong as people stay home through Covid-19. Q3 revenue rose 52% to $378.7 million, well ahead of consensus, while adjusted earnings stood at $0.27 per share, compared to a loss last year. Sonos also raised its full-year guidance, projecting that revenues would grow between 28% to 29% year-over-year to between $1.695 billion to $1.710 billion. Moreover, the company won the first round of its patent case against Google at the U.S. International Trade Commission, as a judge found that the Internet behemoth infringed on five of Sonos’ patents. While the full ruling isn’t available yet, the development is positive and indicates that Sonos could potentially monetize its patents down the road, in what could be a lucrative business.
So is Sonos stock still worth a look at current levels of about $40 per share? Sonos stock currently trades at under 3x projected 2021 revenues and we think this is a relatively reasonable valuation for a couple of reasons. Firstly, Sonos’ growth should remain strong, with sales projected to rise by as much as 29% this year. Longer-term growth should also hold up, driven by the company’s strong platform effect, with customers typically repeating purchases to expand their Sonos systems. Sonos previously indicated that its customers have almost three Sonos products at home on average, and the company is looking to increase this to four to six products in the future. Sonos is also expanding beyond its core home audio market, with the launch of its new Roam portable speakers and its partnership with Audi for in-car entertainment. It’s very likely that the company will enter the headphone market as well. Sonos’ margins have also been trending higher, with gross margins for the first nine months of FY’21 standing at 47.4%, up from 41.6% in the same period last year. This means that Sonos’ profitability is likely to grow meaningfully as sales expand.
Is Sonos stock is poised to trend higher in the coming months, after rising by over 15% over the last week? It looks likely. See the Trefis Machine Learning to test SONO stock chances of a rise after a fall and vice-versa.
[5/18/2021] Sonos Stock: Buy The Dip?
Sonos (NASDAQ:SONO), a company best known for its multi-room speakers and home theater systems, saw its stock decline by about 3% over the last week (five trading days) and has moved by about -15% over the last two weeks. In comparison, the S&P 500 has declined by under 1% over the same period. The sell off comes on account of a broader decline in growth stocks in recent weeks, although Sonos recovered partly late last week, driven by its stronger than expected Q2 FY’21 results (FY ends September) and an improved outlook for the full year. So is Sonos stock poised to rise or is a further sell-off looking more likely? Based on the Trefis machine learning engine, which analyzes Sonos stock’s historical price movements, the stock has a 53% chance of a rise over the next month, after declining by about 3% over the last five trading days. See our analysis on Sonos Stock Chances Of Rise for more details.
So what’s the fundamental picture like for Sonos? Sonos stock currently trades at under 2.5x projected 2021 revenues, which we think is a relatively reasonable valuation for a couple of reasons. Firstly, Sonos’s growth is likely to remain strong, with sales projected to rise by 25% this year. Longer-term growth should also hold up, driven by the company’s strong platform effect, with customers typically repeating purchases to expand their Sonos systems. Sonos says that customers have about three Sonos products at home on average right now, and the company is targeting four to six products in the future. Moreover, last year, about 41% of the company’s sales were to existing customers. Sonos is also expanding beyond the home market, to portable speakers, automotive audio, and likely into the headphones market. Moreover, Sonos’s margins have also been trending higher, with gross margins reaching a record 49.8% in Q2 FY’21, an improvement of 810 basis points versus last year. This is well ahead of the likes of Apple – which posted 42.5% gross margins last quarter. This means that Sonos’s profitability is likely to grow meaningfully as sales expand.
[4/13/2021] Buy Sonos After 70% Rally?
Sonos (NASDAQ:SONO), a company best known for its multi-room home speakers, has seen its stock rise by about 4% over the last week (five trading days). The stock is also up by a solid 70% year-to-date. In comparison, the S&P 500 is up by about 2% and 10% over the last week and year-to-date, respectively. The recent gains come as the company upped its long-term guidance during an investor event in March while looking to expand its presence beyond the home market into the automotive audio, portable speaker, and headphone space. Over the last month, Sonos unveiled a new and more affordable portable speaker called the Roam and said that it was working with Audi to provide Sonos-tuned audio for a new electric vehicle. So is Sonos stock poised to rally further or is a correction looking imminent? Based on our machine learning engine, which analyzes Sonos stock’s historical price movements, the stock has a 55% chance of a rise over the next month, after rising by about 4% over the last five trading days. See our analysis on Sonos Stock Chances Of Rise for more details.
Now, is Sonos stock a buy for longer-term investors? The company expects revenue to rise to about $2.25 billion in fiscal 2024 (FY ends September). This marks a CAGR of about 13% from the mid-point of its 2021 guidance of $1.55 billion. The company’s previous outlook estimated a growth rate of about 10%. Separately, Sonos’ margins outlook is also encouraging, with gross margins projected to stand at between 45% to 47% in FY’24, up from levels of about 43% in FY’20. At its current stock price of about $42 per share, Sonos trades at just about 3.2x projected 2021 Revenues. We think that’s a reasonable valuation considering the company’s improved growth and margins outlook, expanding addressable market, and its loyal (and relatively locked-in) customer base.
Electric vehicles are the future of transportation, but picking the right EV stocks can be tricky. Investing in Electric Vehicle Component Supplier Stocks can be a good alternative to play the growth in the EV market.
See all Trefis Price Estimates and Download Trefis Data here
What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs For CFOs and Finance Teams | Product, R&D, and Marketing Teams
See all Trefis Price Estimates and Download Trefis Data here
What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs For CFOs and Finance Teams | Product, R&D, and Marketing Teams