Critical Analysis: Chewy (NYSE:CHWY) & Cars.com (NYSE:CARS)

Chewy (NYSE:CHWY) and Cars.com (NYSE:CARS) are both retail/wholesale companies, but which is the better stock? We will contrast the two companies based on the strength of their earnings, institutional ownership, profitability, analyst recommendations, risk, valuation and dividends.

Valuation and Earnings

This table compares Chewy and Cars.com”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Chewy	$12.60 billion	0.70	$222.80 million	$0.52	40.80
Cars.com	$724.44 million	0.73	$20.05 million	$0.43	22.06

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

Risk and Volatility

Chewy has a beta of 1.5, indicating that its stock price is 50% more volatile than the S&P 500. Comparatively, Cars.com has a beta of 1.64, indicating that its stock price is 64% more volatile than the S&P 500.

Insider and Institutional Ownership

93.1% of Chewy shares are owned by institutional investors. Comparatively, 89.2% of Cars.com shares are owned by institutional investors. 0.4% of Chewy shares are owned by company insiders. Comparatively, 3.4% of Cars.com shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Chewy and Cars.com’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Chewy	1.77%	53.48%	7.22%
Cars.com	3.73%	18.12%	8.07%

Analyst Ratings

This is a summary of current recommendations for Chewy and Cars.com, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Chewy	0	6	18	1	2.80
Cars.com	1	3	3	1	2.50

Chewy currently has a consensus target price of $41.91, indicating a potential upside of 97.53%. Cars.com has a consensus target price of $14.67, indicating a potential upside of 54.63%. Given Chewy’s stronger consensus rating and higher possible upside, equities analysts clearly believe Chewy is more favorable than Cars.com.

Summary

Chewy beats Cars.com on 9 of the 14 factors compared between the two stocks.

About Chewy

Chewy, Inc., together with its subsidiaries, engages in the pure play e-commerce business in the United States. It provides pet food and treats, pet supplies and pet medications, and other pet-health products, as well as pet services for dogs, cats, fish, birds, small pets, horses, and reptiles through its retail websites and mobile applications. The company was founded in 2010 and is based in Plantation, Florida.

About Cars.com

Cars.com Inc., through its subsidiaries, operates as a digital automotive marketplace that connects local car dealers to consumers in the United States. The company offers a suite of digital solutions that creates connections between individuals researching cars or looking to purchase a car with car dealerships and automotive original equipment manufacturers. It also sells online subscription advertising products to car dealerships by its direct sales force, as well as through its affiliate sales channel. In addition, the company sells display advertising to national advertisers. Further, it offers online automotive marketplace service that connects buyers and sellers through Cars.com, Auto.com, DealerRater.com, NewCars.com, PickupTrucks.com, DealerInspire.com, and LaunchDigitalMarketing.com Websites. Its platform hosts approximately 4.9 million new and used vehicle listings and serves approximately 20,000 franchise and independent car dealers. Cars.com Inc. was founded in 1998 and is headquartered in Chicago, Illinois.