Q4 Earnings Preview for Sonos (SONO)


Sonos, Inc. (NASDAQGS:SONO) is scheduled to report Q4 earnings results on November 20, 2019 at 2:00 PM PST. The company is expected to report earnings of -$0.13/share on revenue of $288.1 million. The consensus earnings per share (EPS) of -$0.13/share is based on a poll of 3 analysts. Last year the company reported earnings of -$0.02/share for the same quarter.

The revenue forecast of $288.1 million based on a poll of 6 analysts implies a year-over-year (YoY) growth of 5.6%. Last year the company reported $272.9 million in revenue for the quarter.

Expected to report EPS of -$0.13/share for Q4, 2019
Metric Expected Prior Year YoY Change
Revenue $288.15 $272.90 5.6%
EPS -$0.13 -$0.02 NM

Sonos sales are very seasonal so analysts will be watching especially close for management’s guidance for the upcoming quarter (Q1, 2020). Historically, the company realizes around 40% of revenues from October to December. For calendar year 2018, the company earned $486 million for the quarter ending December 29th, 2018.

Sonos Revenue.pngSource: Finbox

Earnings Call Trends

Management has a perfect record over the last 4 tracked quarters of exceeding earnings guidance. What are your expectations from Sonos for earnings this quarter? Let us know in the comments!

Analyst Expected vs Reported EPS
Quarter Expected Reported Surprise Result
Q3, 2019 -$0.15 -$0.01 NM Beat
Q2, 2019 -$0.23 -$0.12 NM Beat
Q1, 2019 $0.45 $0.65 44.4% Beat
Q4, 2018 -$0.10 -$0.02 NM Beat

One question we always consider here at the Bankers’ Tribune is how important are earnings reports to Sonos’s stock price performance? It’s more important for some companies than for others.

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 29, 2019, the stock price reacted by increasing by 8.8%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-08-07 $9.80 $10.66 8.8% Increase
2019-05-09 $10.40 $10.82 4.0% Increase
2019-02-06 $13.17 $10.92 -17.1% Decline
2018-11-15 $13.93 $15.44 10.8% Increase

Fundamentals And Technical Analysis

Sonos is currently trading at $14.30/share, down -1.5% for the day. The company is trading at approximately 80% of its 52-week high of $17.77/share. The company’s stock price is up 35% since the last earnings report. The company’s 14 Day Relative Price Index (RSI) of 62.27 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

The current share price implies a price-to-earnings (P/E) multiple of 67.6x and a forward P/E multiple of 35.0x. Sonos’s current share price also implies a price-to-book (P/B) multiple of 5.4x. The following table summarizes some other key fundamental ratios:

Data as of November 20, 2019
Metric Value
Last Fiscal Period FY2019.Q3
Period End Date June 29, 2019
Stock Price (Current) $14.30
P/E Ratio 67.6x
P/E Ratio (Fwd) 35.0x
PEG Ratio 1.0
Total Debt to Capital (%) 2.5%
Levered Free Cash Flow $101.8 million
Enterprise Value / EBITDA 18.4x

Company Profile: Sonos, Inc.

Sonos, Inc. is a small-cap stock with a market capitalization of $1.543 billion and a total enterprise value of $1.244 billion. The company operates in the Consumer Discretionary sector and Household Durables industry.

Sonos, Inc. designs, develops, manufactures, and sells multi-room audio products in the United States and internationally. It provides wireless speakers, home theater speakers, and components. The company offers its products through third-party retail stores, including custom installers of home audio systems; and e-commerce retailers, as well as through its sonos.com Website. The company was formerly known as Rincon Audio, Inc. and changed its name to Sonos, Inc. in May 2004. Sonos, Inc. was founded in 2002 and is headquartered in Santa Barbara, California.

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