Inovalon (NASDAQ:INOV) and CarGurus (NASDAQ:CARG) are both computer and technology companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, earnings, risk, dividends, profitability and analyst recommendations.

Profitability

This table compares Inovalon and CarGurus’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Inovalon -0.40% 3.69% 1.98%
CarGurus 10.34% 12.60% 6.57%

Valuation and Earnings

This table compares Inovalon and CarGurus’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Inovalon $449.36 million 3.33 $34.81 million $0.23 42.65
CarGurus $316.86 million 14.14 $13.19 million $0.12 341.00

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

Analyst Recommendations

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Inovalon 1 1 0 0 1.50
CarGurus 0 2 5 0 2.71

Inovalon currently has a consensus target price of $12.00, suggesting a potential upside of 22.32%. CarGurus has a consensus target price of $43.20, suggesting a potential upside of 5.57%. Given Inovalon’s higher possible upside, equities analysts clearly believe Inovalon is more favorable than CarGurus.

Institutional and Insider Ownership

33.9% of Inovalon shares are held by institutional investors. Comparatively, 63.3% of CarGurus shares are held by institutional investors. 50.9% of Inovalon shares are held by insiders. Comparatively, 51.0% of CarGurus shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

CarGurus beats Inovalon on 9 of the 13 factors compared between the two stocks.

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.

CarGurus Company Profile

CarGurus, Inc. operates an online automotive marketplace connecting buyers and sellers of new and used cars worldwide. The company's marketplace enables users with third-party validation on pricing, dealer reputation, and other information. As of June 30, 2017, it had an active dealer network of approximately 40,000 dealers; and approximately 5.4 million car listings. The company was founded in 2005 and is headquartered in Cambridge, Massachusetts..

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