Analyzing Sleep Number (NASDAQ:SNBR) and Aterian (NASDAQ:ATER)

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

Insider & Institutional Ownership

7.0% of Aterian shares are held by institutional investors. Comparatively, 85.7% of Sleep Number shares are held by institutional investors. 19.5% of Aterian shares are held by insiders. Comparatively, 3.6% of Sleep Number shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Aterian and Sleep Number’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Aterian	-49.30%	-92.04%	-47.83%
Sleep Number	-12.98%	N/A	-16.48%

Volatility and Risk

Aterian has a beta of 0.83, suggesting that its share price is 17% less volatile than the S&P 500. Comparatively, Sleep Number has a beta of 2.49, suggesting that its share price is 149% more volatile than the S&P 500.

Valuation & Earnings

This table compares Aterian and Sleep Number”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Aterian	$68.97 million	0.10	-$18.98 million	($1.99)	-0.34
Sleep Number	$1.34 billion	0.00	-$131.96 million	($7.56)	-0.02

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

Analyst Ratings

This is a breakdown of current recommendations and price targets for Aterian and Sleep Number, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Aterian	1	0	0	0	1.00
Sleep Number	2	2	0	0	1.50

Sleep Number has a consensus target price of $3.50, indicating a potential upside of 2,700.00%. Given Sleep Number’s stronger consensus rating and higher possible upside, analysts clearly believe Sleep Number is more favorable than Aterian.

Summary

Sleep Number beats Aterian on 9 of the 13 factors compared between the two stocks.

About Aterian

Aterian, Inc., together with its subsidiaries, operates as a technology-enabled consumer products company in North America and internationally. Its platform offers home and kitchen appliances; kitchenware; cooling and air quality appliances, such as dehumidifiers; health and beauty products; and essential oils under the Squatty Potty, hOmeLabs, Mueller, Pursteam, Healing Solutions, and Photo Paper Direct brand names. The company primarily serves individual online consumers through online retail channels, such as Amazon and Walmart, as well as through its owned and operated websites and other marketplaces. The company was formerly known as Mohawk Group Holdings, Inc. and changed its name to Aterian, Inc. in April 2021. Aterian, Inc. was founded in 2014 and is headquartered in Summit, New Jersey.

About Sleep Number

Sleep Number Corporation, together with its subsidiaries, offers sleep solutions and services in the United States. The company designs, manufactures, markets, retails, and services beds, pillows, sheets, and other bedding products under the Sleep Number name. It also provides smart adjustable bases under the FlextFit brand, and smart beds under the Climate 360 name. The company sells its products directly to consumers through retail, online, phone, chat, and other. The company was formerly known as Select Comfort Corporation and changed its name to Sleep Number Corporation in November 2017. Sleep Number Corporation was incorporated in 1987 and is headquartered in Minneapolis, Minnesota.