RealReal (NASDAQ:REAL – Get Free Report) and Groupon (NASDAQ:GRPN – Get Free Report) are both small-cap consumer discretionary companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, profitability, dividends, analyst recommendations, earnings, institutional ownership and valuation.
Analyst Ratings
This is a summary of current ratings and target prices for RealReal and Groupon, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| RealReal | 1 | 2 | 6 | 0 | 2.56 |
| Groupon | 2 | 1 | 1 | 0 | 1.75 |
RealReal presently has a consensus price target of $17.75, indicating a potential upside of 55.70%. Groupon has a consensus price target of $24.00, indicating a potential upside of 11.58%. Given RealReal’s stronger consensus rating and higher probable upside, equities research analysts plainly believe RealReal is more favorable than Groupon.
Valuation & Earnings
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| RealReal | $749.91 million | 1.85 | -$41.80 million | ($1.12) | -10.18 |
| Groupon | $498.42 million | 1.76 | -$83.52 million | ($3.11) | -6.92 |
RealReal has higher revenue and earnings than Groupon. RealReal is trading at a lower price-to-earnings ratio than Groupon, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
RealReal has a beta of 2.69, suggesting that its stock price is 169% more volatile than the S&P 500. Comparatively, Groupon has a beta of 0.23, suggesting that its stock price is 77% less volatile than the S&P 500.
Insider & Institutional Ownership
64.7% of RealReal shares are held by institutional investors. Comparatively, 90.0% of Groupon shares are held by institutional investors. 2.7% of RealReal shares are held by insiders. Comparatively, 36.6% of Groupon shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
Profitability
This table compares RealReal and Groupon’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| RealReal | -10.82% | N/A | -17.99% |
| Groupon | -25.26% | N/A | -20.28% |
Summary
RealReal beats Groupon on 10 of the 13 factors compared between the two stocks.
About RealReal
The RealReal, Inc. operates an online marketplace for resale luxury goods in the United State. The company offers various product categories, including women's fashion, men's fashion, jewelry, and watches. It primarily sells products through online marketplace and retail stores. The company was incorporated in 2011 and is headquartered in San Francisco, California.
About Groupon
Groupon, Inc., together with its subsidiaries, operates a marketplace that connects consumers to merchants. It operates in two segments, North America and International. The company sells goods or services on behalf of third-party merchants. It serves customers through its mobile applications and websites. The company was formerly known as ThePoint.com, Inc. and changed its name to Groupon, Inc. in October 2008. Groupon, Inc. was incorporated in 2008 and is headquartered in Chicago, Illinois.
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