Comparing Vroom (NASDAQ:VRM) and Capital One Financial (NYSE:COF)

Vroom (NASDAQ:VRM) and Capital One Financial (NYSE:COF) are both finance companies, but which is the better stock? We will compare the two businesses based on the strength of their valuation, risk, institutional ownership, analyst recommendations, earnings, profitability and dividends.

Profitability

This table compares Vroom and Capital One Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Vroom	-22.85%	-33.80%	-3.78%
Capital One Financial	13.70%	11.64%	1.94%

Insider & Institutional Ownership

25.8% of Vroom shares are held by institutional investors. Comparatively, 89.8% of Capital One Financial shares are held by institutional investors. 2.9% of Vroom shares are held by company insiders. Comparatively, 0.8% of Capital One Financial shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Vroom and Capital One Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Vroom	1	0	0	0	1.00
Capital One Financial	0	4	20	0	2.83

Capital One Financial has a consensus price target of $256.50, suggesting a potential upside of 31.35%. Given Capital One Financial’s stronger consensus rating and higher probable upside, analysts plainly believe Capital One Financial is more favorable than Vroom.

Earnings and Valuation

This table compares Vroom and Capital One Financial”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Vroom	$178.83 million	0.20	-$7.96 million	($11.12)	-0.62
Capital One Financial	$69.25 billion	1.70	$2.45 billion	$16.94	11.53

Capital One Financial has higher revenue and earnings than Vroom. Vroom is trading at a lower price-to-earnings ratio than Capital One Financial, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Vroom has a beta of 1.36, meaning that its share price is 36% more volatile than the S&P 500. Comparatively, Capital One Financial has a beta of 1.1, meaning that its share price is 10% more volatile than the S&P 500.

Summary

Capital One Financial beats Vroom on 12 of the 14 factors compared between the two stocks.

About Vroom

Vroom, Inc. (NASDAQ: VRM) was an online automotive retailer that enabled consumers to buy and sell used vehicles through its digital platform. The company offered vehicle selection, pricing, financing, trade-ins, vehicle delivery and related transaction services, aiming to provide a primarily online alternative to traditional used-car dealerships. Founded in 2013, Vroom expanded its operations across the United States and supported its retail business with vehicle reconditioning, logistics and e-commerce technology.

About Capital One Financial

Capital One Financial Corporation is a bank holding company that provides credit cards, consumer banking, auto financing and commercial banking services. Its offerings include credit cards, deposit accounts, loans and financial services for businesses. The company traces its roots to a credit card business established within Signet Banking Corporation in 1988 and became an independent company in 1994. Capital One is headquartered in McLean, Virginia, and serves customers primarily in the United States, with credit card operations also in the United Kingdom.