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If You're Searching For Tech-Like Returns, Then Consider Sleep Number

Apr. 10, 2021 9:06 AM ETSleep Number Corporation (SNBR)18 Comments


  • Sleep Number gained considerable exposure during the pandemic and has durable advantages in its business.
  • Management is shareholder friendly and has aggressively repurchased shares, thereby contributing to strong total returns.
  • I also highlight the valuation, balance sheet, outlook, and risks worth considering.

Business man on road heading toward a dollar sign
Photo by ra2studio/iStock via Getty Images

If someone told you that a stock would see a 571% return over a 5-year period, you would probably think that they were referring to a technology company. The bedding company Sleep Number (NASDAQ:SNBR) would likely rank fairly low

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Comments (18)

abdulmoiz1254 profile picture
I sold it in the uppers 80s and regretted as it creeped to 130+

Now it's nearer to my exit
But i still thing double digits are enough ..more than that is a hard mattress to sell
@abdulmoiz1254 At 17x this year's expected EPS and this year's EPS growth rate of 37% I think this is an entry point. If you believe that the company has a pretty decent moat from their DTC strategy and proprietary data-driven digital Smart Bed (which will drive sustainable growth as management has repeatedly emphasized) it is actually an amazing entry point. Particularly considering this is the quintessential CANSLIM stock and management has taken out over 40 percent of the outstanding share count in the last five years at prices way below today's level.
abdulmoiz1254 profile picture
I am tempted, specially knowing that the estimates are too low and they beat big

I entered at ~58 on oct 14 a day before their earnings ..and sold them in the 80s

@abdulmoiz1254 Now may be as good a time as any. I really think they're going to smash the current '21 EPS expectations of $6.75...More like $7.50-8.00 in my opinion. The current estimates/guidance builds in negative year over year comps in the second half of '21. The management is really executing (just look at the actual v estimated results the last couple years) and has taken out around 40% of outstanding shares in the last five years! My recent visit to a SNBR store confirmed my thesis.
Interesting Business. Product demand is too elastic for me to own SNBR. Thanks for the work here.
Overall I prefer Tempur Sealy (TPX) over Sleep Number (SNBR) over the long term (mainly as a brand, but as a stock too). However, does anyone else think that TPX only having 38 direct to consumer stores compares to SMBR’s 579 will dramatically impact TPX over time? It seems like TPX mainly sells its products out of businesses like Mattress Firm, Mattress Gallery, etc.....& I’m concerned about slot of retail stores like this. Any thoughts or advice?
Gary Kohler profile picture
Just an observation: Historically SNBR has had a 16 percent operating margin. It got as low as 6% as they were investing in technology and brand development through massive advertising. But in the last 2 quarters op income has risen to over 12 percent and could be back on its way to 16%. As they have 62%+ gross margins, rising above 12% doesn't seem far fetched. But the analysts that cover the stock are effectively looking for op income to fall back to 10% this year. That seems unlikely to me. Longer term, I don't see why, with discipline, management can't get operating income closer to 20% without any gross margin expansion.
RJMC profile picture
I have owned several sleep number beds over last 20 years or so. My family and I liked all of them. This past year I purchased a Purple and it’s is a better bed imo. Purple pillow is awesome too. Long PRPL.
Now that almost everyone has upgraded to a new bed, where do you expect this increased demand to come from? Yes, a good product but your timing is bad. The stock would be a poor investment at this point.
@DanB1978 I disagree with you and think that you are wrong.
@Seeking more alpha than you Wrong about them having a good product, the product cycle, or the stock being a poor investment at this point?
@DanB1978 I think you're wrong in saying "now that almost everyone has upgraded to a new bed." Only a teeny tiny fraction of the population has upgraded to a new bed. If you have data that suggests otherwise, I'd love to see it.
Buyandhold 2012 profile picture
I haven't checked out Sleep Number, so I don't know whether or not it's a buy.

But it sure has done well over the last 10 years.

It has kicked the butt of many of those fancy pants high tech stocks.
stevie2003 profile picture
I trimmed down my position recently. I will purchase more at 115ish price. I think it will come in a little more before powering its way back to 150. In recent months ut has been erratic. Up 4 to 5 % three days in a row and bang down 8 or the next, and visa versa. That kind of action I can live without. At the end of the day... don't bet against SNBR. Great company, great stock.
I had one of the original sleep number beds 20 years ago. It was good then!
I have now gone through 3-4 standard beds and none of them is as comfortable.
My guess is the next one I buy will be a sleep number. In the mean time I own the stock for comfort!
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