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How Do Analysts See Sleep Number Corporation (NASDAQ:SNBR) Performing Over The Next Few Years?

Simply Wall St

In December 2018, Sleep Number Corporation (NASDAQ:SNBR) announced its latest earnings update, which showed that the company gained from a slight tailwind, leading to a single-digit earnings growth of 6.9%. Below, I’ve presented key growth figures on how market analysts view Sleep Number’s earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.

See our latest analysis for Sleep Number

Analysts’ expectations for the coming year seems optimistic, with earnings increasing by a robust 11%. This growth seems to continue into the following year with rates reaching double digit 22% compared to today’s earnings, and finally hitting US$91m by 2022.

NasdaqGS:SNBR Past and Future Earnings, March 7th 2019

While it’s useful to be aware of the growth each year relative to today’s level, it may be more valuable to evaluate the rate at which the business is rising or falling on average every year. The pro of this approach is that we can get a bigger picture of the direction of Sleep Number’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I’ve inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 7.9%. This means that, we can anticipate Sleep Number will grow its earnings by 7.9% every year for the next few years.

Next Steps:

For Sleep Number, I’ve put together three essential factors you should further research:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is SNBR worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether SNBR is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SNBR? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.