La-Z-Boy (NYSE: LZB) and Sleep Number (NASDAQ:SNBR) are both small-cap consumer discretionary companies, but which is the superior business? We will compare the two companies based on the strength of their valuation, analyst recommendations, risk, dividends, earnings, institutional ownership and profitability.

Dividends

La-Z-Boy pays an annual dividend of $0.48 per share and has a dividend yield of 1.6%. Sleep Number does not pay a dividend. La-Z-Boy pays out 27.4% of its earnings in the form of a dividend.

Risk & Volatility

La-Z-Boy has a beta of 1.03, indicating that its stock price is 3% more volatile than the S&P 500. Comparatively, Sleep Number has a beta of 0.61, indicating that its stock price is 39% less volatile than the S&P 500.

Valuation & Earnings

This table compares La-Z-Boy and Sleep Number’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
La-Z-Boy $1.52 billion 0.95 $85.92 million $1.75 17.37
Sleep Number $1.31 billion 1.10 $51.41 million $1.41 25.72

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

Institutional and Insider Ownership

86.5% of La-Z-Boy shares are owned by institutional investors. 3.2% of La-Z-Boy shares are owned by insiders. Comparatively, 4.0% of Sleep Number shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares La-Z-Boy and Sleep Number’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
La-Z-Boy 5.53% 14.33% 9.80%
Sleep Number 4.34% 51.12% 14.26%

Analyst Recommendations

This is a breakdown of current recommendations for La-Z-Boy and Sleep Number, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
La-Z-Boy 0 3 1 0 2.25
Sleep Number 1 3 3 0 2.29

La-Z-Boy currently has a consensus price target of $33.00, indicating a potential upside of 8.55%. Sleep Number has a consensus price target of $33.40, indicating a potential downside of 7.89%. Given La-Z-Boy’s higher probable upside, analysts clearly believe La-Z-Boy is more favorable than Sleep Number.

La-Z-Boy Company Profile

La-Z-Boy Incorporated manufactures, markets, imports, exports, distributes and retails upholstery furniture products. The Company also imports, distributes and retails accessories and casegoods (wood) furniture products. The Company’s segments include the Upholstery segment, the Casegoods segment and the Retail segment. The Company is the producer of reclining chairs and manufacturer/distributor of residential furniture in the United States. The Company sells its products, primarily in the United States and Canada, as well as internationally, to furniture retailers and directly to consumers through stores that it owns and operates. The Company has a network of approximately 340 La-Z-Boy Furniture Galleries stores and over 560 Comfort Studio locations. The Company owns approximately 120 of the La-Z-Boy Furniture Galleries stores. The Company’s other brands include England, Kincaid, American Drew and Hammary.

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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