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

Analyst Ratings

This is a breakdown of current ratings and price targets for Carvana and KAR Auction Services, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Carvana 1 3 10 0 2.64
KAR Auction Services 0 2 3 0 2.60

Carvana presently has a consensus target price of $20.08, indicating a potential downside of 2.27%. KAR Auction Services has a consensus target price of $51.50, indicating a potential upside of 2.41%. Given KAR Auction Services’ higher probable upside, analysts plainly believe KAR Auction Services is more favorable than Carvana.

Valuation & Earnings

This table compares Carvana and KAR Auction Services’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Carvana $365.14 million 7.47 -$93.11 million N/A N/A
KAR Auction Services $3.15 billion 2.16 $222.40 million $1.70 29.58

KAR Auction Services has higher revenue and earnings than Carvana.

Insider and Institutional Ownership

15.2% of Carvana shares are held by institutional investors. Comparatively, 99.2% of KAR Auction Services shares are held by institutional investors. 1.3% of KAR Auction Services shares are held by company 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.

Dividends

KAR Auction Services pays an annual dividend of $1.28 per share and has a dividend yield of 2.5%. Carvana does not pay a dividend. KAR Auction Services pays out 75.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Carvana has increased its dividend for 4 consecutive years.

Profitability

This table compares Carvana and KAR Auction Services’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Carvana -11.81% -153.67% -19.89%
KAR Auction Services 6.94% 22.37% 4.73%

Summary

KAR Auction Services beats Carvana on 9 of the 14 factors compared between the two stocks.

Carvana Company Profile

Carvana Co. is an e-commerce platform for buying used cars. On the Company’s platform, consumers can research and identify a vehicle, inspect it using its proprietary 360-degree vehicle imaging technology, obtain financing and warranty coverage, purchase the vehicle and schedule delivery or pick-up, all from their desktop or mobile devices. The Company’s transaction technologies and online platform transform a traditionally time consuming process by allowing customers to secure financing, complete a purchase and schedule delivery online.

KAR Auction Services Company Profile

KAR Auction Services, Inc. is a provider of whole car auction services in North America, and salvage auction services in North America and the United Kingdom. The Company operates through three segments: ADESA, Inc. (ADESA Auctions or ADESA), Insurance Auto Auctions, Inc. (IAA) and Automotive Finance Corporation (AFC). The ADESA segment is a provider of whole car auctions and related services to the vehicle remarketing industry in North America. It serves its customer base through online auctions and auction facilities that are developed and located to draw professional sellers and buyers together, and allow the buyers to inspect and compare vehicles remotely or in person. As a provider of salvage vehicle auctions and related services, it operates as IAA in the United States and Impact Auto Auctions in Canada, and serves customer base through salvage auction locations throughout North America. The AFC segment provides floorplan financing to independent used vehicle dealers.

Receive News & Stock Ratings for Carvana Co. Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Carvana Co. and related stocks with our FREE daily email newsletter.