Carvana (CVNA) & AutoNation (AN) Financial Review

Carvana (NYSE: CVNA) and AutoNation (NYSE:AN) are both mid-cap retail/wholesale companies, but which is the superior investment? We will contrast the two companies based on the strength of their analyst recommendations, risk, valuation, earnings, profitability, institutional ownership and dividends.

Institutional and Insider Ownership

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14.9% of Carvana shares are held by institutional investors. Comparatively, 69.2% of AutoNation shares are held by institutional investors. 21.7% of Carvana shares are held by insiders. Comparatively, 2.8% of AutoNation shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Carvana and AutoNation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Carvana -11.17% -74.69% -19.48%
AutoNation 2.02% 16.24% 3.81%

Earnings and Valuation

This table compares Carvana and AutoNation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Carvana $858.87 million 3.54 -$18.31 million ($1.21) -18.93
AutoNation $21.53 billion 0.20 $434.60 million $3.81 12.20

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

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Carvana and AutoNation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Carvana 1 5 8 0 2.50
AutoNation 0 9 2 0 2.18

Carvana currently has a consensus target price of $20.50, indicating a potential downside of 10.52%. AutoNation has a consensus target price of $50.78, indicating a potential upside of 9.27%. Given AutoNation’s higher possible upside, analysts plainly believe AutoNation is more favorable than Carvana.

Summary

AutoNation beats Carvana on 9 of the 13 factors compared between the two stocks.

About Carvana

Carvana Co., together with its subsidiaries, operates an e-commerce platform for buying used cars in the United States. The company purchases, reconditions, sells, and delivers vehicles. Its platform allows customers to research and identify a vehicle; inspect it using company's proprietary 360-degree vehicle imaging technology; obtain financing and warranty coverage; purchase the vehicle; and schedule delivery or pick-up. The company was founded in 2012 and is headquartered in Tempe, Arizona.

About AutoNation

AutoNation, Inc., through its subsidiaries, operates as an automotive retailer in the United States. The company operates through three segments: Domestic, Import, and Premium Luxury. It offers a range of automotive products and services, including new and used vehicles; and parts and services, such as automotive repair and maintenance, and wholesale parts and collision services. The company also provides automotive finance and insurance products comprising vehicle services and other protection products, as well as arranges finance for vehicle purchases through third-party finance sources. As of December 31, 2017, it owned and operated 360 new vehicle franchises from 253 stores located primarily in metropolitan markets in the Sunbelt region. The company was founded in 1991 and is headquartered in Fort Lauderdale, Florida.

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