America’s Car-Mart (NASDAQ: CRMT) and Carvana (NYSE:CVNA) are both retail/wholesale companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, dividends, profitability, earnings, institutional ownership, risk and analyst recommendations.
This table compares America’s Car-Mart and Carvana’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
81.7% of America’s Car-Mart shares are owned by institutional investors. Comparatively, 15.2% of Carvana shares are owned by institutional investors. 11.7% of America’s Car-Mart shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
This is a summary of current ratings and target prices for America’s Car-Mart and Carvana, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
America’s Car-Mart presently has a consensus price target of $43.50, indicating a potential downside of 6.35%. Carvana has a consensus price target of $19.58, indicating a potential upside of 20.81%. Given Carvana’s stronger consensus rating and higher probable upside, analysts plainly believe Carvana is more favorable than America’s Car-Mart.
Valuation & Earnings
This table compares America’s Car-Mart and Carvana’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|America’s Car-Mart||$587.75 million||0.57||$20.20 million||$2.70||17.20|
|Carvana||$365.14 million||5.89||-$93.11 million||($1.28)||-12.66|
America’s Car-Mart has higher revenue and earnings than Carvana. Carvana is trading at a lower price-to-earnings ratio than America’s Car-Mart, indicating that it is currently the more affordable of the two stocks.
America’s Car-Mart beats Carvana on 8 of the 12 factors compared between the two stocks.
America’s Car-Mart Company Profile
America’s Car-Mart, Inc. is an automotive retailer focused on the integrated auto sales and finance segment of the used car market. The Company conducts its operations through its two operating subsidiaries, America’s Car Mart, Inc. (Car-Mart of Arkansas) and Colonial Auto Finance, Inc. (Colonial) (Collectively, Car-Mart of Arkansas and Colonial are referred to as Car-Mart). It primarily sells older model used vehicles and provides financing for all of its customers. As of April 30, 2016, the Company operated 143 dealerships located primarily in small cities throughout the South-Central United States. Dealerships are operated on a decentralized basis. Each dealership is responsible for buying (with the assistance of a corporate office buyer) and selling vehicles, making credit decisions, and servicing and collecting the installment contracts it originates. Dealerships also maintain their own records and make daily deposits. The Company has both regular and satellite dealerships.
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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