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

Dividends

Bassett Furniture Industries pays an annual dividend of $0.44 per share and has a dividend yield of 1.2%. Sleep Number does not pay a dividend. Bassett Furniture Industries pays out 25.7% of its earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Sleep Number and Bassett Furniture Industries, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sleep Number 1 3 3 0 2.29
Bassett Furniture Industries 0 1 0 0 2.00

Sleep Number presently has a consensus price target of $33.40, suggesting a potential downside of 10.96%. Bassett Furniture Industries has a consensus price target of $39.00, suggesting a potential upside of 5.69%. Given Bassett Furniture Industries’ higher possible upside, analysts plainly believe Bassett Furniture Industries is more favorable than Sleep Number.

Profitability

This table compares Sleep Number and Bassett Furniture Industries’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sleep Number 4.34% 51.12% 14.26%
Bassett Furniture Industries 4.09% 9.17% 6.15%

Insider and Institutional Ownership

71.8% of Bassett Furniture Industries shares are owned by institutional investors. 4.0% of Sleep Number shares are owned by company insiders. Comparatively, 6.4% of Bassett Furniture Industries shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Risk & Volatility

Sleep Number has a beta of 0.6, indicating that its share price is 40% less volatile than the S&P 500. Comparatively, Bassett Furniture Industries has a beta of 1.05, indicating that its share price is 5% more volatile than the S&P 500.

Valuation and Earnings

This table compares Sleep Number and Bassett Furniture Industries’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sleep Number $1.31 billion 1.14 $51.41 million $1.41 26.60
Bassett Furniture Industries $432.04 million 0.92 $15.82 million $1.71 21.58

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

Summary

Sleep Number beats Bassett Furniture Industries on 10 of the 16 factors compared between the two stocks.

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.

Bassett Furniture Industries Company Profile

Bassett Furniture Industries, Incorporated is a manufacturer, importer and retailer of home furnishings. The Company’s segments include Wholesale, Retail – Company-owned stores and Logistical services. Its wholesale home furnishings segment is involved in the design, manufacture, sourcing, sale and distribution of furniture products to a network of Bassett stores (licensee-owned stores and Company-owned stores) and independent furniture retailers. Its retail segment consists of Company-owned stores. It operates its logistical services segment through its subsidiary, Zenith Freight Lines, LLC, which provides shipping, delivery and warehousing services. Its portfolio of products includes Canopy Bed, Nightstands, Baby Bedding, Bedside Tables, Chaise Lounge, Writing Desks, Kitchen Furniture, Computer Hutch, Game Tables and Fabric Ottomans. Its range of furniture products and accessories are sold through a nation-wide network of over 90 retail stores known as Bassett Home Furnishings.

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