Sonic Automotive (NYSE:SAH) and LMP Automotive (NASDAQ:LMPX) are both small-cap retail/wholesale companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, earnings, analyst recommendations, institutional ownership, profitability, valuation and risk.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Sonic Automotive and LMP Automotive, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sonic Automotive 1 2 2 0 2.20
LMP Automotive 0 0 1 0 3.00

Sonic Automotive currently has a consensus target price of $29.17, indicating a potential upside of 172.59%. LMP Automotive has a consensus target price of $25.00, indicating a potential upside of 341.70%. Given LMP Automotive’s stronger consensus rating and higher probable upside, analysts plainly believe LMP Automotive is more favorable than Sonic Automotive.

Valuation and Earnings

This table compares Sonic Automotive and LMP Automotive’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sonic Automotive $10.45 billion 0.04 $144.14 million $2.65 4.04
LMP Automotive $10.86 million 5.25 -$4.03 million N/A N/A

Sonic Automotive has higher revenue and earnings than LMP Automotive.

Profitability

This table compares Sonic Automotive and LMP Automotive’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sonic Automotive 1.38% 12.96% 2.82%
LMP Automotive N/A N/A N/A

Institutional and Insider Ownership

60.8% of Sonic Automotive shares are owned by institutional investors. Comparatively, 0.2% of LMP Automotive shares are owned by institutional investors. 33.0% of Sonic Automotive shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

Sonic Automotive beats LMP Automotive on 8 of the 11 factors compared between the two stocks.

Sonic Automotive Company Profile

Sonic Automotive, Inc. operates as an automotive retailer in the United States. It operates in two segments, Franchised Dealerships and EchoPark. The Franchised Dealerships segment is involved in the sale of new and used cars and light trucks, and replacement parts; provision of vehicle maintenance, manufacturer warranty repair, and paint and collision repair services; and arrangement of extended warranties, service contracts, financing, insurance, and other aftermarket products. The EchoPark segment sells used cars and light trucks; and arranges finance and insurance product sales in pre-owned vehicle specialty retail locations. As of December 31, 2018, the company operated 108 new vehicle franchises representing 25 brands of cars and light trucks 18 collision repair centers in 13 states; and 8 EchoPark stores. Sonic Automotive, Inc. was founded in 1997 and is based in Charlotte, North Carolina.

LMP Automotive Company Profile

LMP Automotive Holdings, Inc. provides an e-commerce and facilities-based retail platform for consumers to buy, sell, rent, subscribe for, or finance pre-owned and new automobiles in the United States. The company offers pre-owned automobiles, and rentals and subscriptions for pre-owned and new automobiles. Its fleet consists of 215 automobiles, including 40 are available to drivers for rideshare applications. LMP Automotive Holdings, Inc. was incorporated in 2017 and is based in Plantation, Florida.

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