It’s been an interesting few weeks for Sonos (NASDAQ:SONO) stock. A handful of price cuts from analysts has put pressure on the stock. It also hasn’t helped that CEO Patrick Spence sold 65,237 SONO shares in April. However, SONO stock is riding high after its latest earnings report.
Despite supply chain challenges, the company hit the ball right out of the park, reporting better-than-expected quarterly results. Santa Barbara-based company, Sonos, earned six cents on sales of $399.8 million during its fiscal second-quarter ending April 2. Overall, Sonos was able to grow its sales by 20%. Their earnings went down by 50% for the year, which is concerning.
Sonos saw its gross profit margin fall from 49.8% to 44.8%. The company said that the drop is primarily due to a laborious supply chain, making it harder for them to lower costs. The company expects the issues to continue and has reduced its gross margin forecast. Sonos lowered its gross margin guidance from 45.5% to 46% for the full year.
Although the revised guidance is still within the company’s long-term guidance range of 45% to 47%, it is lower than previously guided to 46% to 47%.
Sonos forecasts that its revenue for full fiscal 2022 will be between $1.95 and $2 billion, a 14% to 16% increase from this year. It handily beats the Street estimate of $1.95 billion in the current fiscal year.
Also, just as a side note, Sonos announced new products to bolster an already impressive lineup. They included an entry-level TV soundbar called the Sonos Ray, priced at 279. This also debuts three new colors for its Roam speakers, with a $179 price target.
SONO Stock Is a Buy
Sonos is the world’s leading sound experience company and has provided industry-leading sound and home theater systems for a while. A few years ago, they were on Wall Street but have now taken their stock price to the next level higher.
Sonos boasts a dedicated following on social media and in-home, their products are unique, and customers love them. The pandemic hit Sonos, and their stock range dropped a significant amount. However, they saw an increase in buying activity in the home theater market, which led to increased revenue.
They also saw recent stock market fluctuations, but I think the Sonos phenomenon is slightly different from what you typically see with other companies. The current price level presents a great opportunity for long-term investors.
Sonos has a great business model. It offers flexibility and ease of use for its customers by choosing just a few components from its lineup and the ability to grow further over time with additional products. The business is experiencing strong growth and customer satisfaction. They’ve proven this by showing an increase in average household products over time.
Sonos continues to grow its success and add more and more customers. The amount of growth is unprecedented, surpassing all expectations. This will continue as the company moves forward. With its superb product, brand recognition, and customer loyalty, SONO stock is a great investment. The economic moat it provides will provide astronomical returns for investors.
On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.