Critical Contrast: GrowGeneration (NASDAQ:GRWG) vs. Wayfair (NYSE:W)

Wayfair (NYSE:W) and GrowGeneration (NASDAQ:GRWG) are both consumer discretionary companies, but which is the superior investment? We will compare the two businesses based on the strength of their risk, valuation, analyst recommendations, profitability, earnings, dividends and institutional ownership.

Earnings & Valuation

This table compares Wayfair and GrowGeneration”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Wayfair	$12.46 billion	1.12	-$313.00 million	($2.46)	-42.95
GrowGeneration	$161.74 million	0.55	-$24.05 million	($0.27)	-5.56

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

Profitability

This table compares Wayfair and GrowGeneration’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Wayfair	-2.49%	-3.40%	3.06%
GrowGeneration	-10.07%	-17.44%	-11.52%

Risk & Volatility

Wayfair has a beta of 3.02, suggesting that its stock price is 202% more volatile than the S&P 500. Comparatively, GrowGeneration has a beta of 2.54, suggesting that its stock price is 154% more volatile than the S&P 500.

Institutional and Insider Ownership

89.7% of Wayfair shares are held by institutional investors. Comparatively, 36.0% of GrowGeneration shares are held by institutional investors. 18.4% of Wayfair shares are held by company insiders. Comparatively, 8.1% of GrowGeneration shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings for Wayfair and GrowGeneration, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Wayfair	1	11	18	2	2.66
GrowGeneration	1	1	1	0	2.00

Wayfair currently has a consensus target price of $120.93, suggesting a potential upside of 14.46%. GrowGeneration has a consensus target price of $2.50, suggesting a potential upside of 66.67%. Given GrowGeneration’s higher possible upside, analysts clearly believe GrowGeneration is more favorable than Wayfair.

Summary

Wayfair beats GrowGeneration on 11 of the 15 factors compared between the two stocks.

About Wayfair

Wayfair Inc. provides e-commerce business in the United States and internationally. The company offers approximately thirty million products for the home sector. It offers online selections of furniture, décor, housewares, and home improvement products through its sites consisting of Wayfair, Joss & Main, AllModern, Birch Lane, Perigold, and Wayfair Professional. The company offers its products under the Three Posts and Mercury Row brand name. The company was founded in 2002 and is headquartered in Boston, Massachusetts.

About GrowGeneration

GrowGeneration Corp., through its subsidiaries, owns and operates retail hydroponic and organic gardening stores in the United States. The company engages in the marketing and distribution of nutrients, additives, growing media, lighting, and environmental control systems, as well as other indoor and outdoor growing products. It operates a chain of stores in California, Colorado, Michigan, Maine, Oklahoma, Oregon, Washington, Montana, New York, Ohio, Mississippi, Missouri, Arizona, Rhode Island, Florida, Massachusetts, Virginia, New Jersey, and New Mexico, as well as growgeneration.com, an online superstore for cultivators, a wholesale business for resellers, HRG Distribution, and benching, racking, and storage solutions and MMI. The company was formerly known as Easylife Corp. GrowGeneration Corp. was founded in 2008 and is based in Greenwood Village, Colorado.