Cars.com (NYSE:CARS) and Inovalon (NASDAQ:INOV) are both small-cap retail/wholesale companies, but which is the superior stock? We will contrast the two businesses based on the strength of their profitability, dividends, analyst recommendations, earnings, institutional ownership, risk and valuation.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cars.com $626.26 million 2.72 $224.44 million $2.28 10.73
Inovalon $449.36 million 3.33 $34.81 million $0.23 42.65

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

Analyst Recommendations

This is a summary of current ratings and price targets for Cars.com and Inovalon, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cars.com 0 1 3 0 2.75
Inovalon 1 1 0 0 1.50

Cars.com currently has a consensus price target of $37.50, suggesting a potential upside of 53.25%. Inovalon has a consensus price target of $12.00, suggesting a potential upside of 22.32%. Given Cars.com’s stronger consensus rating and higher probable upside, equities analysts plainly believe Cars.com is more favorable than Inovalon.

Risk & Volatility

Cars.com has a beta of -0.2, meaning that its stock price is 120% less volatile than the S&P 500. Comparatively, Inovalon has a beta of 1.1, meaning that its stock price is 10% more volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Cars.com 28.90% 7.78% 4.89%
Inovalon -0.40% 3.69% 1.98%

Insider & Institutional Ownership

33.9% of Inovalon shares are owned by institutional investors. 0.0% of Cars.com shares are owned by company insiders. Comparatively, 50.9% of Inovalon shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

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

Cars.com Company Profile

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.

Inovalon Company Profile

Inovalon Holdings, Inc., a technology company, provides cloud-based platforms empowering a data-driven transformation from volume-based to value-based models in the healthcare industry. The company's platform enables the assessment and enhancement of clinical and quality outcomes and financial performance. It serves health plans and provider organizations, as well as pharmaceutical, medical device, and diagnostics companies. The company provides technology that supports approximately 500 healthcare organizations. Its platforms are informed by data pertaining to approximately 932,000 physicians; 455,000 clinical facilities; and approximately 240 million individuals and 37 billion medical events. Inovalon Holdings, Inc. was founded in 1998 and is headquartered in Bowie, Maryland.

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