Sonos Inc. [NASDAQ: SONO] is a consumer electronics company that designs, develops, and produces high-end consumer electronics, including speakers and audio products.
The company makes a variety of wireless audio products, including smart speakers, home theatres and home audio components. It’s, involved in providing home sound systems. The company’s wireless multi-room music eliminates the need for old-fashioned wires, allowing music to be played simultaneously in multiple rooms.
Trivia: The Santa Barbara, California-based company founded in 2002 by John MacFarlane, Craig Shelburne, Tom Cullen, and Trung Mai.
Sonos Stock Analysis: Distribution & Products
Sonos offers its products through third-party retail stores and e-commerce retailers as well as through its website www.sonos.com.
The company’s product profile also includes charging cradles, mounts, stands, networking cables, music players, alternating current adapters, controllers, wireless speakers and loudspeakers.
The company is known for its voice-enabled wireless speaker Sonos One, and a voice-enabled home theatre speaker Sonos Beam.
Recently, it introduced Move, its battery-powered portable speaker. The company derives a majority of its revenue from the United States, though it has presence in Europe, South East Asia, the Middle East, Africa and Asia Pacific.
Sonos products are compatible with major voice assistants such as Amazon Alexa, Google Assistant, and Apple’s Siri. Sonos has also partnered with companies such as Pandora, Spotify, MOG, Amazon Music, etc., which offer music services.
Sonos Stock Outlook
Earlier this year, Sonos partnered with furniture giant Ikea, with the Swedish company selling 2 Sonos-powered and co-branded speaker models in around 300 stores worldwide. Analysts believe this alliance with the furniture giant has the potential to drive adoption of new customers.
Sonos Inc. [NASDAQ: SONO] reported a fiscal fourth-quarter loss of $29.6 million. This equals a quarterly loss of $0.28 per share versus the consensus estimate of a loss of $0.21. The company had reported a loss of $0.02 per share in the same period a year ago.
The company generated revenues of $294 million for the quarter, exceeding analysts’ estimates of $289.05 million by 1.65%. It had posted revenue of $272.94 million in the same period last year.
The firm’s revenue for the quarter was up 7.7% on a year-over-year basis. The speaker-maker reported that its annual loss narrowed to $4.8 million, or 5 cents per share while it expects its full-year revenue to be in the range of $1.37 billion to $1.4 billion.
Sonos Inc has a 52-week low of $9.23 and a 52-week high of $15.68.
Is Sonos Stock A Buy?
The smart speaker maker went public in August of 2018. More than a year down the line, the maker of wireless speakers and home sound systems is still trading below its debut price of $15 per share.
Sonos shares have risen around 48% since the beginning of this year. Still there is a considerable gap between where it started and where it is today, which represents a lucrative prospect for investors.
What somewhat reduced the luster of Sonos’ expensive speaker lineup was the market share enjoyed by the affordably priced Alexa-enabled devices and the Google Home Mini speakers.
The speaker-maker’s new strategy of introducing competitively priced products is supposed to help it wrest some of the market share from bigger tech giants.
Sonos Stock Buy or Sell?
On top of that, analysts also view Sonos as a potential acquisition target for one of the tech giants.
Experts believe that Sonos Inc. [NASDAQ: SONO] derives its real value from family ecosystem, whereby additional speakers from the company complement its existing ones. The smart speaker maker is all set to soar higher if it succeeds in convincing its target audience about the benefits of installing additional speakers throughout their homes.
Additionally, the speaker maker can reach greater heights if it is able to expand the number of homes it is currently in. Sonos’ new equipment rental program is precisely directed towards that goal as it gives people a shot at enhanced sound experience without having to spend money upfront to buy the product.
The consumer electronics company is also showing its intent to play a more active role in voice control with its acquisition (first since going public) of Paris- and Tokyo-based voice assistant startup Snips—an artificial intelligence (AI) platform for connected devices. The deal worth $37.5 million is expected to give Sonos the capability to offer its customers more music-focused offerings and with additional privacy.
Despite Alexa’s and Echo Dot’s ubiquity and affordability, Sonos has managed to clock a sales growth of 10% or more each year for over a decade. This in spite of slapping its products with a heftier price tag.
Moving forward, the company, despite missing analyst expectations, registered a healthy increase in its revenue. The revenue, derived by sales of wireless-speaker, touched almost $117 million—an increase of around 25%.
What Are the Risks of Buying Sonos?
The company has a beta of 1.59, which attests to the volatility of the share price.
A negative net margin of 0.38% means the smart speaker maker is falling behind its peers in generating profits.
Also, estimates for the coming quarters and current fiscal year and how they change will have a bearing on stock prices in the days ahead.
Analysts have set earning per share (EPS) estimate of $0.66 on $550 million in revenues for the next quarter and $0.23 on $1.37 billion in revenues for the current fiscal year.
Also, it is worth keeping in mind that the outlook of the industry to which the company belongs can also impact its stock prices.
Sonos Stock Forecast Summary
Analysts at the Royal Bank of Canada upgraded Sonos by setting an “outperform” rating and an $18.00 price target on the stock.
Analysts’ 12-month price targets for Sonos range from a high estimate of $20.00 to a low estimate of $14.00. On average, they anticipate Sonos’ stock price to reach $18.00 in the next 12 months, which represents a possible surge of around 37% from the stock’s current price.
There are currently 2 hold ratings, 3 buy ratings and 1 strong buy rating for the stock, which means the Street is ready to turn the volume up on Sonos, thus making the speaker manufacturer a rewarding investment prospect.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.