General Motors (NYSE:GM) vs. Vroom (NASDAQ:VRM) Critical Contrast

General Motors (NYSE:GM) and Vroom (NASDAQ:VRM) are both auto/tires/trucks companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, earnings, profitability and dividends.

Institutional & Insider Ownership

92.7% of General Motors shares are held by institutional investors. Comparatively, 25.8% of Vroom shares are held by institutional investors. 0.5% of General Motors shares are held by insiders. Comparatively, 2.9% of Vroom shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares General Motors and Vroom’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
General Motors	1.38%	16.68%	3.87%
Vroom	-37.16%	-51.07%	-6.63%

Analyst Recommendations

This is a summary of recent ratings and price targets for General Motors and Vroom, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
General Motors	1	4	17	1	2.78
Vroom	1	0	0	0	1.00

General Motors currently has a consensus target price of $95.65, suggesting a potential upside of 14.25%. Given General Motors’ stronger consensus rating and higher probable upside, equities analysts clearly believe General Motors is more favorable than Vroom.

Risk and Volatility

General Motors has a beta of 1.3, suggesting that its stock price is 30% more volatile than the S&P 500. Comparatively, Vroom has a beta of 1.2, suggesting that its stock price is 20% more volatile than the S&P 500.

Valuation and Earnings

This table compares General Motors and Vroom”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
General Motors	$185.02 billion	0.41	$2.70 billion	$2.48	33.76
Vroom	$178.83 million	0.24	-$7.96 million	($12.76)	-0.64

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

Summary

General Motors beats Vroom on 14 of the 15 factors compared between the two stocks.

About General Motors

General Motors Company designs, builds, and sells trucks, crossovers, cars, and automobile parts; and provide software-enabled services and subscriptions worldwide. The company operates through GM North America, GM International, Cruise, and GM Financial segments. It markets its vehicles primarily under the Buick, Cadillac, Chevrolet, GMC, Baojun, and Wuling brand names. In addition, the company sells trucks, crossovers, cars, and automobile parts through retail dealers, and distributors and dealers, as well as to fleet customers, including daily rental car companies, commercial fleet customers, leasing companies, and governments. Further, it offers range of after-sale services through dealer network, such as maintenance, light repairs, collision repairs, vehicle accessories, and extended service warranties. Additionally, the company provides automotive financing; and software-enabled services and subscriptions. General Motors Company was founded in 1908 and is headquartered in Detroit, Michigan.

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.