Critical Analysis: Sally Beauty (NYSE:SBH) vs. Carvana (NYSE:CVNA)

Carvana (NYSE:CVNA) and Sally Beauty (NYSE:SBH) are both consumer discretionary companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, institutional ownership, valuation, profitability, earnings, risk and analyst recommendations.

Earnings & Valuation

This table compares Carvana and Sally Beauty”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Carvana	$25.06 billion	2.86	$1.41 billion	$1.81	35.98
Sally Beauty	$3.73 billion	0.40	$195.88 million	$1.92	8.23

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

Institutional & Insider Ownership

56.7% of Carvana shares are owned by institutional investors. 15.2% of Carvana shares are owned by company insiders. Comparatively, 2.0% of Sally Beauty shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Carvana and Sally Beauty’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Carvana	6.26%	37.06%	12.21%
Sally Beauty	5.16%	24.36%	7.07%

Analyst Ratings

This is a summary of recent recommendations for Carvana and Sally Beauty, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Carvana	0	7	16	1	2.75
Sally Beauty	1	3	3	0	2.29

Carvana presently has a consensus price target of $84.14, indicating a potential upside of 29.18%. Sally Beauty has a consensus price target of $17.40, indicating a potential upside of 10.16%. Given Carvana’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Carvana is more favorable than Sally Beauty.

Volatility and Risk

Carvana has a beta of 3.49, meaning that its share price is 249% more volatile than the S&P 500. Comparatively, Sally Beauty has a beta of 1.05, meaning that its share price is 5% more volatile than the S&P 500.

Summary

Carvana beats Sally Beauty on 14 of the 15 factors compared between the two stocks.

About Carvana

Carvana Co., together with its subsidiaries, operates an e-commerce platform for buying and selling used cars in the United States. Its platform allows customers to research and identify a vehicle; inspect it using company's 360-degree vehicle imaging technology; obtain financing and warranty coverage; purchase the vehicle; and schedule delivery or pick-up from their desktop or mobile devices. The company also operates auction sites. The company was founded in 2012 and is based in Tempe, Arizona.

About Sally Beauty

Sally Beauty Holdings, Inc. operates as a specialty retailer and distributor of professional beauty supplies. The company operates through two segments, Sally Beauty Supply and Beauty Systems Group. The Sally Beauty Supply segment offers beauty products, including hair color and care products, skin and nail care products, styling tools, and other beauty products for retail customers, salons, and salon professionals. This segment also provides products under Wella and L'Oreal brands. The Beauty Systems Group segment offers professional beauty products, such as hair color and care products, skin and nail care products, styling tools, and other beauty items directly to salons and salon professionals through its professional-only stores, e-commerce platforms, and sales force, as well as through franchised stores under the Armstrong McCall store name. This segment also sells products under Paul Mitchell and Wella brands. It operates stores and franchised units in the United States, Puerto Rico, Canada, Mexico, Chile, Peru, the United Kingdom, Ireland, Belgium, France, the Netherlands, Spain, and Germany. The company distributes its products through full-service/exclusive distributors and open-line distributors. Sally Beauty Holdings, Inc. was founded in 1964 and is headquartered in Denton, Texas.