![]() ![]() This is important news as it opens another major market for Sonos. While the company is growing its main business, it is also reaching out to expand. The company is growing within the affluent households at the moment, but it also plans to grow within its core markets, and later internationally. This progress comes with what I believe to be an attractive valuation for a company with significant growth potential in the short, medium, and long terms. At every level, the company has been achieving great progress. Sonos offers investors strong fundamentals when it comes to the top line, bottom line, margins, and balance sheet. When we take into account that the company has zero net debt and an already profitable business model, the risks in terms of valuation are mitigated significantly, and therefore, I think the current price is justified. Data by YChartsĪnother aspect in favor of the company's current valuation is its net cash position which accounts for 15% of its market cap. ![]() Therefore, I do believe that paying 27 times for a company that grows this quickly makes sense. Top-line growth is expected to be 13%, and with improving margins, investors should expect an even faster EPS growth. In my opinion, this is an attractive valuation for a company that is growing so fast. The company is trading for a forward P/E of 27. Sonos seems like a growing company with a conservative balance sheet that is interested in rewarding its shareholders. It has $650 million in net cash and that alone accounts for almost 15% of its market cap, and with no net debt, the company will use its cash to invest in the business, and also to reward shareholders with buybacks even if they are modest at the moment. The company is improving at translating every dollar in sales into FCF and EPS, and that is a great sign for a growing company. Besides, investors also see improvements in free cash flow margin and profit margin. The company showed that gross margins have been improving, and it forecasts that they will stay this high throughout 2024. The company's margins have been improving. Moreover, the company's forecast for 2021, 2022, and 2023 is promising, and investors should expect double-digit growth rate fueled by top-line growth as well as buybacks and margin expansion. This by itself is great news as it means that the company can sustain itself and grow without outside capital infusion. The company has been profitable since 2019 and maintained its profitability in 2020. The company sees growth from existing customers adding more devices and reaching more customers both in the U. The company expects to reach a revenue of $2.25 billion by the end of FY 2024, and it implies a CAGR of 13%. The company enjoys double-digit top-line growth and forecasts that it will be able to maintain it. The company provides wireless speakers, home theater speakers, components, and accessories. If you invest in Sonos today, you will do it for growth.Īccording to Seeking Alpha company overview, Sonos designs develops, manufactures, and sells multi-room audio products in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. It may pay dividends in the future, but it cannot be taken into account when analyzing it as it is a very far and uncertain scenario. However, Sonos is a $4.5 billion company, and it is still at the beginning of its growth. When analyzing a growth company that doesn't pay a dividend, I sometimes think of the company in terms of a possible future dividend. After reading the company's Q1 2021 reports, and watching their analyst day presentation, I decided to share with you my analysis. The company had a great 2020 in terms of share appreciation, and while I enjoy their products, I never considered them as an investment. In the past, I analyzed Square ( SQ), Salesforce ( CRM), and others.Īnother interesting company is Sonos ( NASDAQ: SONO). Therefore, I analyze stocks, mainly in the technology sector, which offer what I believe a good risk/reward ratio. However, I do allocate a portion of my capital to growth stocks and mutual funds. I am mostly a dividend growth investor, as most of my readers know. ![]()
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