Analyzing Vroom (NASDAQ:VRM) & Capital One Financial (NYSE:COF)

Capital One Financial (NYSE:COF) and Vroom (NASDAQ:VRM) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their valuation, dividends, analyst recommendations, risk, profitability, institutional ownership and earnings.

Valuation and Earnings

This table compares Capital One Financial and Vroom”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Capital One Financial	$62.76 billion	2.02	$2.45 billion	$16.94	12.18
Vroom	$10.09 million	3.67	-$7.96 million	($11.12)	-0.64

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

Profitability

This table compares Capital One Financial and Vroom’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Capital One Financial	13.70%	11.64%	1.94%
Vroom	-32.38%	-47.65%	-5.59%

Analyst Ratings

This is a breakdown of current recommendations and price targets for Capital One Financial and Vroom, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Capital One Financial	0	4	20	0	2.83
Vroom	1	0	0	0	1.00

Capital One Financial currently has a consensus target price of $256.50, suggesting a potential upside of 24.27%. Given Capital One Financial’s stronger consensus rating and higher probable upside, research analysts clearly believe Capital One Financial is more favorable than Vroom.

Volatility and Risk

Capital One Financial has a beta of 1.1, suggesting that its share price is 10% more volatile than the S&P 500. Comparatively, Vroom has a beta of 1.36, suggesting that its share price is 36% more volatile than the S&P 500.

Insider and Institutional Ownership

89.8% of Capital One Financial shares are owned by institutional investors. Comparatively, 25.8% of Vroom shares are owned by institutional investors. 0.8% of Capital One Financial shares are owned by insiders. Comparatively, 2.9% of Vroom shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

Capital One Financial beats Vroom on 11 of the 14 factors compared between the two stocks.

About Capital One Financial

Capital One Financial Corporation operates as the financial services holding company for the Capital One, National Association, which engages in the provision of various financial products and services in the United States, Canada, and the United Kingdom. It operates through three segments: Credit Card, Consumer Banking, and Commercial Banking. The company accepts checking accounts, money market deposits, negotiable order of withdrawals, savings deposits, and time deposits. Its loan products include credit card loans; auto and retail banking loans; and commercial and multifamily real estate, and commercial and industrial loans. The company also offers credit and debit card products; online direct banking services; and provides advisory, capital markets, treasury management, and depository services. It serves consumers, small businesses, and commercial clients through digital channels, branches, cafés, and other distribution channels located in New York, Louisiana, Texas, Maryland, Virginia, New Jersey, and California. The company was founded in 1988 and is headquartered in McLean, Virginia.

About Vroom

Vroom, Inc. operates as an automotive finance company. The company offers vehicle financing to its customers through third party dealers under the UACC brand. It also provides artificial intelligence powered analytics and digital services to dealers, automotive financial services companies, and others in the automotive industry for automotive retail. The company was formerly known as Auto America, Inc. and changed its name to Vroom, Inc. in July 2015. Vroom, Inc. was incorporated in 2012 and is based in Houston, Texas.