Lithia Motors (NYSE:LAD) vs. Barnes & Noble Education (NYSE:BNED) Financial Review

Lithia Motors (NYSE:LAD) and Barnes & Noble Education (NYSE:BNED) are both consumer discretionary companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, analyst recommendations, dividends, risk, valuation, earnings and institutional ownership.

Volatility & Risk

Lithia Motors has a beta of 1.27, meaning that its stock price is 27% more volatile than the S&P 500. Comparatively, Barnes & Noble Education has a beta of 1.44, meaning that its stock price is 44% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations and price targets for Lithia Motors and Barnes & Noble Education, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lithia Motors	0	6	6	0	2.50
Barnes & Noble Education	1	0	2	1	2.75

Lithia Motors currently has a consensus price target of $393.80, indicating a potential upside of 27.19%. Barnes & Noble Education has a consensus price target of $17.25, indicating a potential upside of 35.29%. Given Barnes & Noble Education’s stronger consensus rating and higher probable upside, analysts clearly believe Barnes & Noble Education is more favorable than Lithia Motors.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lithia Motors	$38.21 billion	0.18	$819.60 million	$34.76	8.91
Barnes & Noble Education	$1.71 billion	0.26	$16.87 million	$0.64	19.92

Lithia Motors has higher revenue and earnings than Barnes & Noble Education. Lithia Motors 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.

Institutional and Insider Ownership

38.5% of Barnes & Noble Education shares are owned by institutional investors. 1.1% of Lithia Motors shares are owned by company insiders. Comparatively, 1.7% of Barnes & Noble Education shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

Lithia Motors pays an annual dividend of $3.00 per share and has a dividend yield of 1.0%. Barnes & Noble Education pays an annual dividend of $0.32 per share and has a dividend yield of 2.5%. Lithia Motors pays out 8.6% of its earnings in the form of a dividend. Barnes & Noble Education pays out 50.0% 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. Lithia Motors has raised its dividend for 16 consecutive years.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Lithia Motors	2.06%	12.05%	3.03%
Barnes & Noble Education	1.29%	8.77%	2.66%

About Lithia Motors

Lithia Motors, Inc. operates as an automotive retailer worldwide. It operates in two segments, Vehicle Operations and Financing Operations. The company’s Vehicle Operations segment sells new and used vehicles; provides parts, repair, and maintenance services; vehicle finance; and insurance products. Its Financing Operations segment provides financing to customers buying and leasing retail vehicles. The company sells its products and services through the Driveway and Greencars brand names through a network of locations, e-commerce platforms, and captive finance solutions. Lithia Motors, Inc. was founded in 1946 and is headquartered in Medford, Oregon.

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.