Vroom (NASDAQ:VRM – Get Free Report) and Encore Capital Group (NASDAQ:ECPG – Get Free Report) are both finance companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, valuation, dividends, profitability, institutional ownership, analyst recommendations and risk.
Insider & Institutional Ownership
25.8% of Vroom shares are owned by institutional investors. 2.9% of Vroom shares are owned by company insiders. Comparatively, 3.0% of Encore Capital Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
Profitability
This table compares Vroom and Encore Capital Group’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Vroom | -32.38% | -47.65% | -5.59% |
| Encore Capital Group | 15.86% | 29.83% | 5.58% |
Analyst Ratings
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Vroom | 1 | 0 | 0 | 0 | 1.00 |
| Encore Capital Group | 0 | 1 | 5 | 0 | 2.83 |
Encore Capital Group has a consensus target price of $103.25, suggesting a potential upside of 0.88%. Given Encore Capital Group’s stronger consensus rating and higher probable upside, analysts plainly believe Encore Capital Group is more favorable than Vroom.
Earnings & Valuation
This table compares Vroom and Encore Capital Group”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Vroom | $178.83 million | 0.23 | -$7.96 million | ($11.12) | -0.71 |
| Encore Capital Group | $1.77 billion | 1.23 | $256.83 million | $13.21 | 7.75 |
Encore Capital Group has higher revenue and earnings than Vroom. Vroom is trading at a lower price-to-earnings ratio than Encore Capital Group, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
Vroom has a beta of 1.27, indicating that its stock price is 27% more volatile than the S&P 500. Comparatively, Encore Capital Group has a beta of 1.3, indicating that its stock price is 30% more volatile than the S&P 500.
Summary
Encore Capital Group beats Vroom on 13 of the 14 factors compared between the two stocks.
About Vroom
Vroom, Inc. operates as an automotive finance company. The company offers vehicle financing to its customers through third party dealers under the UACC brand. It also provides artificial intelligence powered analytics and digital services to dealers, automotive financial services companies, and others in the automotive industry for automotive retail. The company was formerly known as Auto America, Inc. and changed its name to Vroom, Inc. in July 2015. Vroom, Inc. was incorporated in 2012 and is based in Houston, Texas.
About Encore Capital Group
Encore Capital Group, Inc., a specialty finance company, provides debt recovery solutions and other related services for consumers across financial assets worldwide. The company purchases portfolios of defaulted consumer receivables at deep discounts to face value, as well as manages them by working with individuals as they repay their obligations and works toward financial recovery. It is also involved in the provision of early stage collection, business process outsourcing, and contingent collection services. In addition, the company engages in debt servicing and other portfolio management services to credit originator for non-performing loans. Further, it offers credit management services. Encore Capital Group, Inc. was incorporated in 1999 and is headquartered in San Diego, California.
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