As you might know, Sonos, Inc. (NASDAQ:SONO) just kicked off its latest first-quarter results with some very strong numbers. It was overall a positive result, with revenues beating expectations by 4.4% to hit US$613m. Sonos also reported a statutory profit of US$0.64, which was an impressive 67% above what the analysts had forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
After the latest results, the eight analysts covering Sonos are now predicting revenues of US$1.65b in 2024. If met, this would reflect an okay 3.6% improvement in revenue compared to the last 12 months. Sonos is also expected to turn profitable, with statutory earnings of US$0.23 per share. In the lead-up to this report, the analysts had been modelling revenues of US$1.65b and earnings per share (EPS) of US$0.20 in 2024. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the substantial gain in earnings per share expectations following these results.
The consensus price target rose 16% to US$21.94, suggesting that higher earnings estimates flow through to the stock's valuation as well. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Sonos analyst has a price target of US$25.00 per share, while the most pessimistic values it at US$18.60. This is a very narrow spread of estimates, implying either that Sonos is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Sonos' past performance and to peers in the same industry. It's pretty clear that there is an expectation that Sonos' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 4.8% growth on an annualised basis. This is compared to a historical growth rate of 8.2% over the past five years. Compare this to the 92 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 4.7% per year. So it's pretty clear that, while Sonos' revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Sonos following these results. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Sonos analysts - going out to 2026, and you can see them free on our platform here.
You can also see our analysis of Sonos' Board and CEO remuneration and experience, and whether company insiders have been buying stock.
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