Critical Analysis: Zumiez (NASDAQ:ZUMZ) & Driven Brands (NASDAQ:DRVN)

Zumiez (NASDAQ:ZUMZ) and Driven Brands (NASDAQ:DRVN) are both consumer discretionary 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.

Risk & Volatility

Zumiez has a beta of 1, meaning that its share price has a similar volatility profile to the S&P 500.Comparatively, Driven Brands has a beta of 0.94, meaning that its share price is 6% less volatile than the S&P 500.

Insider & Institutional Ownership

95.4% of Zumiez shares are held by institutional investors. Comparatively, 77.1% of Driven Brands shares are held by institutional investors. 24.3% of Zumiez shares are held by company insiders. Comparatively, 4.4% of Driven Brands 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 Zumiez and Driven Brands, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Zumiez	0	3	0	0	2.00
Driven Brands	1	7	6	2	2.56

Driven Brands has a consensus price target of $16.43, suggesting a potential upside of 28.27%. Given Driven Brands’ stronger consensus rating and higher probable upside, analysts plainly believe Driven Brands is more favorable than Zumiez.

Profitability

This table compares Zumiez and Driven Brands’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Zumiez	1.36%	3.71%	1.78%
Driven Brands	8.61%	24.13%	5.03%

Earnings & Valuation

This table compares Zumiez and Driven Brands”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Zumiez	$932.75 million	0.23	$13.38 million	$0.72	19.14
Driven Brands	$1.93 billion	1.09	$140.16 million	$1.04	12.32

Driven Brands has higher revenue and earnings than Zumiez. Driven Brands is trading at a lower price-to-earnings ratio than Zumiez, indicating that it is currently the more affordable of the two stocks.

Summary

Driven Brands beats Zumiez on 11 of the 15 factors compared between the two stocks.

About Zumiez

Zumiez Inc. operates as a specialty retailer of apparel, footwear, accessories, and hardgoods for young men and women. The company provides hardgoods, including skateboards, snowboards, bindings, components, and other equipment. It operates stores in the United States, Canada, Europe, and Australia under the names of Zumiez, Blue Tomato, and Fast Times. It operates zumiez.com, zumiez.ca, blue-tomato.com, and fasttimes.com.au e-commerce websites. Zumiez Inc. was founded in 1978 and is headquartered in Lynnwood, Washington.

About Driven Brands

Driven Brands Holdings Inc., together with its subsidiaries, provides automotive services to retail and commercial customers in the United States, Canada, and internationally. It offers various services, such as paint, collision, glass, repair, car wash, oil change, and maintenance services. The company also distributes automotive parts, including radiators, air conditioning components, and exhaust products to automotive repair shops, auto parts stores, body shops, and other auto repair outlets; windshields and glass accessories through a network of distribution centers; and consumable products, such as oil filters and wiper blades, as well as training services to repair and maintenance, and paint and collision shops. It sells its products and services under the CARSTAR, IMO, MAACO, Meineke Car Care Centers, PH Vitres D’Autos, Take 5 Oil Change, Take 5 Car Wash, Auto Glass Now, Fix Auto USA, and 1-800-Radiator & A/C, Spire Supply, and Automotive Training Institute brands. The company was founded in 1972 and is headquartered in Charlotte, North Carolina.