KAR Auction Services (NYSE: KAR) and Carvana (NASDAQ:CVNA) are both retail/wholesale companies, but which is the better stock? We will compare the two businesses based on the strength of their profitabiliy, earnings, analyst recommendations, valuation, risk, dividends and institutional ownership.

Profitability

This table compares KAR Auction Services and Carvana’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
KAR Auction Services 7.16% 20.54% 4.50%
Carvana -24.16% N/A -45.03%

Dividends

KAR Auction Services pays an annual dividend of $1.28 per share and has a dividend yield of 3.1%. Carvana does not pay a dividend. KAR Auction Services pays out 77.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. KAR Auction Services has raised its dividend for 4 consecutive years.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for KAR Auction Services and Carvana, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
KAR Auction Services 0 1 6 0 2.86
Carvana 0 1 9 0 2.90

KAR Auction Services presently has a consensus price target of $50.00, suggesting a potential upside of 19.90%. Carvana has a consensus price target of $18.67, suggesting a potential downside of 11.70%. Given KAR Auction Services’ higher possible upside, research analysts clearly believe KAR Auction Services is more favorable than Carvana.

Valuation and Earnings

This table compares KAR Auction Services and Carvana’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
KAR Auction Services $3.26 billion 1.75 $762.40 million $1.66 25.12
Carvana $451.27 million 0.70 -$103.11 million N/A N/A

KAR Auction Services has higher revenue and earnings than Carvana.

Summary

KAR Auction Services beats Carvana on 9 of the 12 factors compared between the two stocks.

KAR Auction Services Company Profile

KAR Auction Services, Inc. is a provider of whole car auction services in North America, and salvage auction services in North America and the United Kingdom. The Company operates through three segments: ADESA, Inc. (ADESA Auctions or ADESA), Insurance Auto Auctions, Inc. (IAA) and Automotive Finance Corporation (AFC). The ADESA segment is a provider of whole car auctions and related services to the vehicle remarketing industry in North America. It serves its customer base through online auctions and auction facilities that are developed and located to draw professional sellers and buyers together, and allow the buyers to inspect and compare vehicles remotely or in person. As a provider of salvage vehicle auctions and related services, it operates as IAA in the United States and Impact Auto Auctions in Canada, and serves customer base through salvage auction locations throughout North America. The AFC segment provides floorplan financing to independent used vehicle dealers.

Carvana Company Profile

Carvana Co. is an e-commerce platform for buying used cars. On the Company’s platform, consumers can research and identify a vehicle, inspect it using its proprietary 360-degree vehicle imaging technology, obtain financing and warranty coverage, purchase the vehicle and schedule delivery or pick-up, all from their desktop or mobile devices. The Company’s transaction technologies and online platform transform a traditionally time consuming process by allowing customers to secure financing, complete a purchase and schedule delivery online.

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