Rush Enterprises (NASDAQ: RUSHA) and Group 1 Automotive (NYSE:GPI) are both small-cap retail/wholesale companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, institutional ownership, profitabiliy, risk, valuation and earnings.

Volatility & Risk

Rush Enterprises has a beta of 1.16, suggesting that its stock price is 16% more volatile than the S&P 500. Comparatively, Group 1 Automotive has a beta of 1.64, suggesting that its stock price is 64% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Rush Enterprises and Group 1 Automotive, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Rush Enterprises 0 2 1 0 2.33
Group 1 Automotive 1 3 1 0 2.00

Rush Enterprises currently has a consensus target price of $35.67, indicating a potential downside of 4.96%. Group 1 Automotive has a consensus target price of $65.50, indicating a potential upside of 4.17%. Given Group 1 Automotive’s higher probable upside, analysts clearly believe Group 1 Automotive is more favorable than Rush Enterprises.

Earnings and Valuation

This table compares Rush Enterprises and Group 1 Automotive’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Rush Enterprises $4.19 billion 0.35 $250.44 million $1.31 28.65
Group 1 Automotive $10.80 billion 0.12 $414.29 million $6.79 9.26

Group 1 Automotive has higher revenue and earnings than Rush Enterprises. Group 1 Automotive is trading at a lower price-to-earnings ratio than Rush Enterprises, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Rush Enterprises and Group 1 Automotive’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Rush Enterprises 1.26% 6.17% 1.97%
Group 1 Automotive 1.32% 17.16% 3.51%

Dividends

Group 1 Automotive pays an annual dividend of $0.96 per share and has a dividend yield of 1.5%. Rush Enterprises does not pay a dividend. Group 1 Automotive pays out 14.1% of its earnings in the form of a dividend. Group 1 Automotive has increased its dividend for 7 consecutive years.

Institutional & Insider Ownership

76.7% of Rush Enterprises shares are owned by institutional investors. Comparatively, 97.0% of Group 1 Automotive shares are owned by institutional investors. 11.2% of Rush Enterprises shares are owned by insiders. Comparatively, 7.0% of Group 1 Automotive shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

Group 1 Automotive beats Rush Enterprises on 11 of the 16 factors compared between the two stocks.

About Rush Enterprises

Rush Enterprises, Inc. is an integrated retailer of commercial vehicles and related services. The Company operates through the Truck Segment, which includes its operation of a regional network of commercial vehicle dealerships under the name Rush Truck Centers. Through its Rush Truck Centers, it offers services, including retail sales of new and used commercial vehicles, aftermarket parts sales, service and repair facilities, financing, leasing and rental, and insurance products. As of December 31, 2016, the Company operated 100 Rush Truck Centers in 21 states. The Company’s Rush Truck Centers are located in Alabama, Arizona, California, Colorado, Florida, Georgia, Idaho, Kentucky, Missouri, Nevada, New Mexico, North Carolina, Ohio, Oklahoma, Tennessee, Texas, Utah and Virginia. Its Rush Truck Leasing provides full-service maintenance on customers’ vehicles. At Rush Truck Centers, it offers third-party financing to assist customers in purchasing new and used commercial vehicles.

About Group 1 Automotive

Group 1 Automotive, Inc. is an operator in the automotive retail industry. The Company, through its dealerships, sells new and used cars and light trucks; arranges related vehicle financing; sells service and insurance contracts; provides automotive maintenance and repair services, and sells vehicle parts. The Company operates through three segments: the U.S., which includes the activities of its corporate office, the United Kingdom and Brazil. The Company owned and operated 224 franchises, representing 32 brands of automobiles, at 171 dealership locations and 47 collision centers.

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