America’s Car-Mart (NASDAQ: CRMT) and Carvana (NYSE:CVNA) are both retail/wholesale companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, earnings, risk, institutional ownership, profitability, analyst recommendations and valuation.

Insider and Institutional Ownership

89.1% of America’s Car-Mart shares are held by institutional investors. Comparatively, 12.6% of Carvana shares are held by institutional investors. 11.7% of America’s Car-Mart shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

This table compares America’s Car-Mart and Carvana’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
America’s Car-Mart 3.58% 9.09% 4.98%
Carvana -11.81% -153.67% -19.89%

Valuation and Earnings

This table compares America’s Car-Mart and Carvana’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
America’s Car-Mart $587.75 million 0.57 $20.20 million $2.70 17.19
Carvana $365.14 million 5.61 -$93.11 million N/A N/A

America’s Car-Mart has higher revenue and earnings than Carvana.

Analyst Ratings

This is a summary of current ratings and price targets for America’s Car-Mart and Carvana, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
America’s Car-Mart 0 2 0 0 2.00
Carvana 1 3 10 0 2.64

America’s Car-Mart presently has a consensus target price of $43.50, suggesting a potential downside of 6.25%. Carvana has a consensus target price of $19.58, suggesting a potential upside of 26.92%. Given Carvana’s stronger consensus rating and higher possible upside, analysts plainly believe Carvana is more favorable than America’s Car-Mart.

Summary

America’s Car-Mart beats Carvana on 7 of the 11 factors compared between the two stocks.

America’s Car-Mart Company Profile

America’s Car-Mart, Inc. is an automotive retailer focused on the integrated auto sales and finance segment of the used car market. The Company conducts its operations through its two operating subsidiaries, America’s Car Mart, Inc. (Car-Mart of Arkansas) and Colonial Auto Finance, Inc. (Colonial) (Collectively, Car-Mart of Arkansas and Colonial are referred to as Car-Mart). It primarily sells older model used vehicles and provides financing for all of its customers. As of April 30, 2016, the Company operated 143 dealerships located primarily in small cities throughout the South-Central United States. Dealerships are operated on a decentralized basis. Each dealership is responsible for buying (with the assistance of a corporate office buyer) and selling vehicles, making credit decisions, and servicing and collecting the installment contracts it originates. Dealerships also maintain their own records and make daily deposits. The Company has both regular and satellite dealerships.

Carvana Company Profile

Carvana Co. is an e-commerce platform for buying used cars. On the Company’s platform, consumers can research and identify a vehicle, inspect it using its proprietary 360-degree vehicle imaging technology, obtain financing and warranty coverage, purchase the vehicle and schedule delivery or pick-up, all from their desktop or mobile devices. The Company’s transaction technologies and online platform transform a traditionally time consuming process by allowing customers to secure financing, complete a purchase and schedule delivery online.

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