Financial Analysis: Alliance Entertainment (NASDAQ:AENT) versus Pool (NASDAQ:POOL)

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

Analyst Ratings

This is a breakdown of current ratings for Pool and Alliance Entertainment, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Pool	2	6	5	0	2.23
Alliance Entertainment	0	2	1	0	2.33

Pool presently has a consensus price target of $235.67, indicating a potential upside of 22.83%. Alliance Entertainment has a consensus price target of $10.00, indicating a potential upside of 81.82%. Given Alliance Entertainment’s stronger consensus rating and higher probable upside, analysts plainly believe Alliance Entertainment is more favorable than Pool.

Institutional & Insider Ownership

99.0% of Pool shares are owned by institutional investors. Comparatively, 0.3% of Alliance Entertainment shares are owned by institutional investors. 3.0% of Pool shares are owned by company insiders. Comparatively, 77.5% of Alliance Entertainment shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Volatility & Risk

Pool has a beta of 1.06, indicating that its share price is 6% more volatile than the S&P 500. Comparatively, Alliance Entertainment has a beta of 0.43, indicating that its share price is 57% less volatile than the S&P 500.

Profitability

This table compares Pool and Alliance Entertainment’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Pool	7.40%	32.74%	10.91%
Alliance Entertainment	2.01%	19.91%	5.71%

Valuation and Earnings

This table compares Pool and Alliance Entertainment”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Pool	$5.29 billion	1.32	$406.40 million	$10.87	17.65
Alliance Entertainment	$1.06 billion	0.26	$15.08 million	$0.44	12.50

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

Summary

Pool beats Alliance Entertainment on 11 of the 14 factors compared between the two stocks.

About Pool

Pool Corporation distributes swimming pool supplies, equipment, and related leisure products in the United States and internationally. The company offers maintenance products, including chemicals, supplies, and pool accessories; repair and replacement parts for pool equipment, such as cleaners, filters, heaters, pumps, and lights; and building materials, such as concrete, plumbing and electrical components, functional and decorative pool surfaces, decking materials, tiles, hardscapes, and natural stones for pool installations and remodeling. It also provides pool equipment and components for new pool construction and the remodeling of existing pools; irrigation and related products, such as irrigation system components, and professional turf care equipment and supplies; commercial products, including heaters, safety equipment, commercial decking equipment, and commercial pumps and filters. In addition, the company offers fiberglass pools, and hot tubs and packaged pool kits comprising walls, liners, braces, and coping for in-ground and above-ground pools; and other pool construction and recreational products comprising discretionary recreational and related outdoor living products, such as grills and components for outdoor kitchens. It serves swimming pool remodelers and builders; specialty retailers that sell swimming pool supplies; swimming pool repair and service businesses; irrigation construction and landscape maintenance contractors; and commercial pool operators and pool contractors. Pool Corporation was incorporated in 1993 and is headquartered in Covington, Louisiana.

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.