Sleep Number (NASDAQ:SNBR) earnings and shareholder returns have been trending downwards for the last year, but the stock surges 12% this past week

Published
July 29, 2022
NasdaqGS:SNBR
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This month, we saw the Sleep Number Corporation (NASDAQ:SNBR) up an impressive 32%. But that's not enough to compensate for the decline over the last twelve months. Specifically, the stock price slipped by 57% in that time. So the bounce should be viewed in that context. It may be that the fall was an overreaction.

While the last year has been tough for Sleep Number shareholders, this past week has shown signs of promise. So let's look at the longer term fundamentals and see if they've been the driver of the negative returns.

See our latest analysis for Sleep Number

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

Unfortunately Sleep Number reported an EPS drop of 42% for the last year. This reduction in EPS is not as bad as the 57% share price fall. This suggests the EPS fall has made some shareholders are more nervous about the business. The P/E ratio of 9.25 also points to the negative market sentiment.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

earnings-per-share-growth
NasdaqGS:SNBR Earnings Per Share Growth July 29th 2022

It might be well worthwhile taking a look at our free report on Sleep Number's earnings, revenue and cash flow.

A Different Perspective

We regret to report that Sleep Number shareholders are down 57% for the year. Unfortunately, that's worse than the broader market decline of 14%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Longer term investors wouldn't be so upset, since they would have made 6%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand Sleep Number better, we need to consider many other factors. Even so, be aware that Sleep Number is showing 3 warning signs in our investment analysis , and 1 of those is concerning...

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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Find out whether Sleep Number is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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