Critical Survey: TrueCar (TRUE) and Trivago (NASDAQ:TRVG)

Trivago (NASDAQ: TRVG) and TrueCar (NASDAQ:TRUE) are both internet services – nec companies, but which is the superior investment? We will contrast the two companies based on the strength of their analyst recommendations, dividends, earnings, profitability, valuation, institutional ownership and risk.

Insider & Institutional Ownership

8.2% of Trivago shares are owned by institutional investors. Comparatively, 92.2% of TrueCar shares are owned by institutional investors. 15.5% of TrueCar shares are owned by 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.

Profitability

This table compares Trivago and TrueCar’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Trivago -2.68% -3.09% -2.83%
TrueCar -10.29% -10.38% -8.12%

Analyst Recommendations

This is a summary of current ratings for Trivago and TrueCar, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Trivago 1 8 1 0 2.00
TrueCar 0 3 5 0 2.63

Trivago presently has a consensus target price of $13.40, suggesting a potential upside of 85.34%. TrueCar has a consensus target price of $17.50, suggesting a potential upside of 50.21%. Given Trivago’s higher possible upside, equities analysts plainly believe Trivago is more favorable than TrueCar.

Earnings and Valuation

This table compares Trivago and TrueCar’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Trivago $834.68 million 3.04 -$56.08 million ($0.01) -723.00
TrueCar $277.51 million 4.20 -$41.70 million ($0.35) -33.29

TrueCar has lower revenue, but higher earnings than Trivago. Trivago is trading at a lower price-to-earnings ratio than TrueCar, indicating that it is currently the more affordable of the two stocks.

Summary

TrueCar beats Trivago on 7 of the 13 factors compared between the two stocks.

About Trivago

Trivago NV is a company based in the Netherlands that operates an online hotel search platform. The platform allows users to search for, compare and book hotels. It gathers information from various third parties’ platforms and provides information about the hotel, pictures, ratings, reviews and filters, such as price, location and extra options. The Company offers access to approximately 1.3 million hotels in over 190 countries via more than 50 localized websites and applications in various languages. The Company also offers marketing tools and services to hotels and hotel chains, as well as to online travel agencies and advertisers, among others. Its principal executive offices are located in Germany.

About TrueCar

TrueCar, Inc. is an Internet-based information, technology, and communication services company. The Company has a data-driven online platform, which features market data and analytics. The Company-branded platform is available on its TrueCar Website and mobile applications. It customizes and operates its platform on a co-branded basis for its affinity group marketing partners, including financial institutions, membership-based organizations, and employee buying programs for a range of enterprises. The Company enables users to obtain market-based pricing data on new and used cars, and to connect with its network of TrueCar Certified Dealers. Its network of over 13,000 TrueCar Certified Dealers consists primarily of new car franchises, as well as independent dealers selling used vehicles. Its subsidiary, ALG, Inc., provides forecasts and consulting services regarding determination of the residual value of an automobile at given future points in time.

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