If you've shopped for any bedding products lately, you're well aware of the choices consumers have. The reason why Casper trades at such a low P/S valuation to begin with is that selling mattresses is a cutthroat business that historically doesn't generate a high profit margin, although large players like Tempur Sealy (NYSE: TPX) and Sleep Number (NASDAQ: SNBR) have experienced improving profitability over the last few years. Competition is one reason to avoid the stock That's pretty cheap even for a company that is still working to strengthen its bottom line.Р”В¬SPR PS Ratio data by YCharts. While inflationary costs are not showing signs of going away anytime soon, these headwinds are creating an opportunity to buy this growing consumer brand at a steep discount.Р”В¬asper's current price-to-sales (P/S) ratio of 0.33 is down from the 0.60 sales multiple it was trading for earlier this year. While Casper's profitability has improved year over year, its net loss has widened sequentially from $21.2 million in Q1 to a loss of $33.7 million in Q2.Р”В¬asper is dealing with higher transportation costs and other inflationary pressures that are delaying management's plan to move the business toward profitability. Low expectationsР”Вespite strong momentum on the top line, the stock price is down nearly 25% year to date. Analysts expect Casper to report $603 million in revenue for 2021, which would represent an increase of 21.5% over 2020. Between those four years, Casper went from an unknown brand to pulling in $358 million in revenue, and it still has momentum. The global consumer mattress industry grew 12.8% per year from 2014 through 2018, according to the Frost & Sullivan Assessment. Through 2020, Casper generated $497 million in revenue for a compound annual growth rate of 31% over those four years. It launched the original Casper mattress in 2014 and reached $169 million in revenue by 2016. Casper is gaining market shareР”В¬asper was a fast-growing business before the pandemic. 'Our momentum remains strong, and our brand is resonating with consumers, who are both spending more time at home and assigning greater value to rest and wellness,' CEO Philip Krim said in the Q2 earnings report.

That compares favorably to 20% growth in Q1, 18% in Q4 2020, and a decline of 3.3% year over year in Q3 2020. This is especially important for a consumer goods company like Casper that is trying to build its brand in what is traditionally a highly competitive market for bedding products.Р”Р‡or the second quarter, Casper reported a strong 45% year-over-year growth rate on the top line. In any industry, it's always a great sign when a business is showing accelerating growth in revenue.

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