Contrasting LKQ (NASDAQ:LKQ) & Alliance Entertainment (NASDAQ:AENT)

Alliance Entertainment (NASDAQ:AENT) and LKQ (NASDAQ:LKQ) are both consumer discretionary companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, analyst recommendations, institutional ownership, risk, earnings, valuation and dividends.

Analyst Ratings

This is a summary of current recommendations and price targets for Alliance Entertainment and LKQ, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Alliance Entertainment	0	2	1	0	2.33
LKQ	2	1	3	0	2.17

Alliance Entertainment presently has a consensus price target of $10.00, suggesting a potential upside of 77.94%. LKQ has a consensus price target of $31.08, suggesting a potential upside of 20.62%. Given Alliance Entertainment’s stronger consensus rating and higher probable upside, analysts clearly believe Alliance Entertainment is more favorable than LKQ.

Insider and Institutional Ownership

0.3% of Alliance Entertainment shares are owned by institutional investors. Comparatively, 95.6% of LKQ shares are owned by institutional investors. 77.5% of Alliance Entertainment shares are owned by insiders. Comparatively, 0.4% of LKQ shares are owned by 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 Alliance Entertainment and LKQ’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Alliance Entertainment	2.01%	19.91%	5.71%
LKQ	3.37%	10.84%	4.64%

Volatility & Risk

Alliance Entertainment has a beta of 0.43, suggesting that its stock price is 57% less volatile than the S&P 500. Comparatively, LKQ has a beta of 0.84, suggesting that its stock price is 16% less volatile than the S&P 500.

Earnings and Valuation

This table compares Alliance Entertainment and LKQ”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Alliance Entertainment	$1.06 billion	0.27	$15.08 million	$0.44	12.77
LKQ	$13.69 billion	0.48	$607.00 million	$1.80	14.32

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

Summary

LKQ beats Alliance Entertainment on 9 of the 14 factors compared between the two stocks.

About Alliance Entertainment

Alliance Entertainment Holding Corporation operates as a wholesaler, distributor, and e-commerce provider for the entertainment industry worldwide. It offers vinyl records, video games, digital video discs, blu-rays, toys, compact discs, collectibles, and other entertainment and consumer products. The company also provides third party logistics products and services. It distributes its physical media, entertainment products, hardware, and accessories through multi-channel strategy. The company was founded in 1990 and is headquartered in Plantation, Florida.

About LKQ

LKQ Corporation engages in the distribution of replacement parts, components, and systems used in the repair and maintenance of vehicles and specialty vehicle aftermarket products and accessories. It operates through four segments: Wholesale-North America, Europe, Specialty, and Self Service. The company distributes bumper covers, automotive body panels, and lights, as well as mechanical automotive parts and accessories; salvage products, including mechanical and collision parts comprising engines; transmissions; door assemblies; sheet metal products, such as trunk lids, fenders, and hoods; lights and bumper assemblies; scrap metal and other materials to metals recyclers; and brake pads, discs and sensors, clutches, steering and suspension products, filters, and oil and automotive fluids, as well as electrical products, including spark plugs and batteries. In addition, the company distributes recreational vehicle appliances and air conditioners, towing hitches, truck bed covers, vehicle protection products, marine electronics, cargo management products, wheels, tires, and suspension products. It serves collision and mechanical repair shops, and new and used car dealerships, as well as retail customers. The company operates in the United States, Canada, the United Kingdom, Germany, Belgium, the Netherlands, Luxembourg, Italy, the Czech Republic, Austria, Poland, Slovakia, Taiwan, and other European countries. LKQ Corporation was incorporated in 1998 and is headquartered in Chicago, Illinois.