Barnes & Noble Education (NYSE:BNED) and Sonic Automotive (NYSE:SAH) Head to Head Analysis

Barnes & Noble Education (NYSE:BNED) and Sonic Automotive (NYSE:SAH) are both small-cap consumer discretionary companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, earnings, risk, analyst recommendations, dividends, institutional ownership and profitability.

Profitability

This table compares Barnes & Noble Education and Sonic Automotive’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Barnes & Noble Education	1.29%	8.77%	2.66%
Sonic Automotive	1.37%	20.75%	3.51%

Risk and Volatility

Barnes & Noble Education has a beta of 1.27, indicating that its stock price is 27% more volatile than the S&P 500. Comparatively, Sonic Automotive has a beta of 0.86, indicating that its stock price is 14% less volatile than the S&P 500.

Valuation & Earnings

This table compares Barnes & Noble Education and Sonic Automotive”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Barnes & Noble Education	$1.71 billion	0.24	$16.87 million	$0.64	18.20
Sonic Automotive	$15.15 billion	0.13	$118.70 million	$6.27	9.66

Sonic Automotive has higher revenue and earnings than Barnes & Noble Education. Sonic Automotive is trading at a lower price-to-earnings ratio than Barnes & Noble Education, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings for Barnes & Noble Education and Sonic Automotive, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Barnes & Noble Education	1	1	2	0	2.25
Sonic Automotive	2	4	4	0	2.20

Barnes & Noble Education currently has a consensus target price of $17.25, indicating a potential upside of 48.07%. Sonic Automotive has a consensus target price of $98.88, indicating a potential upside of 63.20%. Given Sonic Automotive’s higher probable upside, analysts plainly believe Sonic Automotive is more favorable than Barnes & Noble Education.

Insider and Institutional Ownership

38.5% of Barnes & Noble Education shares are held by institutional investors. Comparatively, 46.9% of Sonic Automotive shares are held by institutional investors. 1.7% of Barnes & Noble Education shares are held by insiders. Comparatively, 43.7% of Sonic Automotive shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Dividends

Barnes & Noble Education pays an annual dividend of $0.32 per share and has a dividend yield of 2.7%. Sonic Automotive pays an annual dividend of $1.64 per share and has a dividend yield of 2.7%. Barnes & Noble Education pays out 50.0% of its earnings in the form of a dividend. Sonic Automotive pays out 26.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Sonic Automotive has raised its dividend for 4 consecutive years.

Summary

Sonic Automotive beats Barnes & Noble Education on 12 of the 17 factors compared between the two stocks.

About Barnes & Noble Education

Barnes and Noble Education, Inc. engages in the management and operation of bookstore chains in universities. It operates through the Retail and Wholesale segments. The Retail segment operates college, university, and K-12 school bookstores, physical bookstores, and virtual bookstores. The Wholesale segment sells and distributes new and used textbooks to physical bookstores. The company was founded by Leonard S, Riggio in 1965 and is headquartered in Basking Ridge, NJ.

About Sonic Automotive

Sonic Automotive, Inc. operates as an automotive retailer in the United States. It operates in three segments, Franchised Dealerships, EchoPark, and Powersports. The Franchised Dealerships segment is involved in the sale of new and used cars and light trucks, and replacement parts; provision of vehicle maintenance, manufacturer warranty repair, and paint and collision repair services; and arrangement of extended warranties, service contracts, financing, insurance, and other aftermarket products for its guests. The EchoPark segment sells used cars and light trucks; and arranges finance and insurance product sales for its guests in pre-owned vehicle specialty retail locations. The Powersports Segment sells new and used powersports vehicles, such as motorcycles, and personal watercraft and all-terrain vehicles; and offers finance and insurance services. The company was incorporated in 1997 and is based in Charlotte, North Carolina.