Lithia Motors (NYSE:LAD – Get Free Report) and Sally Beauty (NYSE:SBH – Get Free Report) are both consumer discretionary companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, dividends, risk, valuation, profitability, analyst recommendations and institutional ownership.
Analyst Recommendations
This is a summary of current ratings and target prices for Lithia Motors and Sally Beauty, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Lithia Motors | 0 | 4 | 7 | 0 | 2.64 |
| Sally Beauty | 1 | 3 | 3 | 0 | 2.29 |
Lithia Motors presently has a consensus target price of $431.22, indicating a potential upside of 47.60%. Sally Beauty has a consensus target price of $17.40, indicating a potential upside of 6.00%. Given Lithia Motors’ stronger consensus rating and higher probable upside, research analysts clearly believe Lithia Motors is more favorable than Sally Beauty.
Profitability
| Net Margins | Return on Equity | Return on Assets | |
| Lithia Motors | 1.88% | 12.16% | 3.14% |
| Sally Beauty | 5.16% | 24.36% | 7.07% |
Earnings and Valuation
This table compares Lithia Motors and Sally Beauty”s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Lithia Motors | $37.94 billion | 0.17 | $819.60 million | $30.15 | 9.69 |
| Sally Beauty | $3.73 billion | 0.41 | $195.88 million | $1.92 | 8.55 |
Lithia Motors has higher revenue and earnings than Sally Beauty. Sally Beauty is trading at a lower price-to-earnings ratio than Lithia Motors, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
Lithia Motors has a beta of 1.23, meaning that its stock price is 23% more volatile than the S&P 500. Comparatively, Sally Beauty has a beta of 1.05, meaning that its stock price is 5% more volatile than the S&P 500.
Summary
Lithia Motors beats Sally Beauty on 8 of the 12 factors compared between the two stocks.
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 Sally Beauty
Sally Beauty Holdings, Inc. operates as a specialty retailer and distributor of professional beauty supplies. The company operates through two segments, Sally Beauty Supply and Beauty Systems Group. The Sally Beauty Supply segment offers beauty products, including hair color and care products, skin and nail care products, styling tools, and other beauty products for retail customers, salons, and salon professionals. This segment also provides products under Wella and L'Oreal brands. The Beauty Systems Group segment offers professional beauty products, such as hair color and care products, skin and nail care products, styling tools, and other beauty items directly to salons and salon professionals through its professional-only stores, e-commerce platforms, and sales force, as well as through franchised stores under the Armstrong McCall store name. This segment also sells products under Paul Mitchell and Wella brands. It operates stores and franchised units in the United States, Puerto Rico, Canada, Mexico, Chile, Peru, the United Kingdom, Ireland, Belgium, France, the Netherlands, Spain, and Germany. The company distributes its products through full-service/exclusive distributors and open-line distributors. Sally Beauty Holdings, Inc. was founded in 1964 and is headquartered in Denton, Texas.
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