PetMed Express (NASDAQ:PETS) versus Carvana (NYSE:CVNA) Critical Analysis

Carvana (NYSE:CVNA) and PetMed Express (NASDAQ:PETS) are both consumer discretionary companies, but which is the better stock? We will contrast the two companies based on the strength of their valuation, risk, earnings, institutional ownership, profitability, dividends and analyst recommendations.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Carvana and PetMed Express, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Carvana	0	7	16	1	2.75
PetMed Express	1	1	0	0	1.50

Carvana currently has a consensus target price of $84.14, indicating a potential upside of 12.71%. Given Carvana’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Carvana is more favorable than PetMed Express.

Earnings and Valuation

This table compares Carvana and PetMed Express”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Carvana	$20.32 billion	4.04	$1.41 billion	$1.81	41.24
PetMed Express	$179.02 million	0.22	-$57.29 million	($1.38)	-1.31

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

Profitability

This table compares Carvana and PetMed Express’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Carvana	6.26%	37.06%	12.21%
PetMed Express	-17.34%	-91.69%	-35.15%

Risk and Volatility

Carvana has a beta of 3.49, suggesting that its stock price is 249% more volatile than the S&P 500. Comparatively, PetMed Express has a beta of 0.78, suggesting that its stock price is 22% less volatile than the S&P 500.

Institutional and Insider Ownership

56.7% of Carvana shares are owned by institutional investors. Comparatively, 73.3% of PetMed Express shares are owned by institutional investors. 15.2% of Carvana shares are owned by company insiders. Comparatively, 1.3% of PetMed Express shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Summary

Carvana beats PetMed Express on 14 of the 15 factors compared between the two stocks.

About Carvana

Carvana Co., together with its subsidiaries, operates an e-commerce platform for buying and selling used cars in the United States. Its platform allows customers to research and identify a vehicle; inspect it using company's 360-degree vehicle imaging technology; obtain financing and warranty coverage; purchase the vehicle; and schedule delivery or pick-up from their desktop or mobile devices. The company also operates auction sites. The company was founded in 2012 and is based in Tempe, Arizona.

About PetMed Express

PetMed Express, Inc., together with its subsidiaries, operates as a pet pharmacy in the United States. The company markets prescription and non-prescription pet medications, health products, and other supplies for dogs, cats, and horses. It offers non-prescription medications and supplies, such as flea and tick control products, bone and joint care products, vitamins, treats, nutritional supplements, hygiene products, and household pet supplies; and prescription medications, including heartworm preventatives, flea and tick preventatives, arthritis, dermatitis, thyroid, diabetes, pain medications, heart/blood pressure, and other specialty medications, as well as generic substitutes. The company also sells food, beds, crates, stairs, and other pet supplies. It sells its products through its Internet website; mobile app; customer support center; and direct mail/print, which includes brochures and postcards. The company was incorporated in 1996 and is headquartered in Delray Beach, Florida.