Analyzing Chewy (NYSE:CHWY) & O’Reilly Automotive (NASDAQ:ORLY)

O’Reilly Automotive (NASDAQ:ORLY) and Chewy (NYSE:CHWY) are both consumer discretionary companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, institutional ownership, earnings, risk, dividends and valuation.

Volatility and Risk

O’Reilly Automotive has a beta of 0.52, suggesting that its share price is 48% less volatile than the S&P 500. Comparatively, Chewy has a beta of 1.42, suggesting that its share price is 42% more volatile than the S&P 500.

Profitability

This table compares O’Reilly Automotive and Chewy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
O’Reilly Automotive	14.27%	-232.45%	15.79%
Chewy	2.09%	60.88%	7.83%

Institutional and Insider Ownership

85.0% of O’Reilly Automotive shares are held by institutional investors. Comparatively, 93.1% of Chewy shares are held by institutional investors. 0.8% of O’Reilly Automotive shares are held by company insiders. Comparatively, 0.3% of Chewy shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares O’Reilly Automotive and Chewy”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
O’Reilly Automotive	$17.78 billion	3.89	$2.54 billion	$3.14	27.23
Chewy	$12.60 billion	0.69	$222.80 million	$0.60	35.19

O’Reilly Automotive has higher revenue and earnings than Chewy. O’Reilly Automotive is trading at a lower price-to-earnings ratio than Chewy, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for O’Reilly Automotive and Chewy, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
O’Reilly Automotive	0	3	14	1	2.89
Chewy	0	8	17	1	2.73

O’Reilly Automotive currently has a consensus target price of $107.24, indicating a potential upside of 25.41%. Chewy has a consensus target price of $30.82, indicating a potential upside of 45.95%. Given Chewy’s higher probable upside, analysts clearly believe Chewy is more favorable than O’Reilly Automotive.

Summary

O’Reilly Automotive beats Chewy on 8 of the 14 factors compared between the two stocks.

About O’Reilly Automotive

O’Reilly Automotive, Inc., together with its subsidiaries, operates as a retailer and supplier of automotive aftermarket parts, tools, supplies, equipment, and accessories in the United States, Puerto Rico, and Mexico. The company provides new and remanufactured automotive hard parts and maintenance items, such as alternators, batteries, brake system components, belts, chassis parts, driveline parts, engine parts, fuel pumps, hoses, starters, temperature control, water pumps, antifreeze, appearance products, engine additives, filters, fluids, lighting products, and oil and wiper blades; and accessories, including floor mats, seat covers, and truck accessories. It also offers auto body paint and related materials, automotive tools, and professional service provider service equipment. In addition, the company provide enhanced services and programs comprising used oil, oil filter, and battery recycling; battery, wiper, and bulb replacement; battery diagnostic testing; electrical and module testing; check engine light code extraction; loaner tool program; drum and rotor resurfacing; custom hydraulic hoses; and professional paint shop mixing and related materials. Further, it offers do-it-yourself and professional service for domestic and imported automobiles, vans, and trucks. The company was founded in 1957 and is headquartered in Springfield, Missouri.

About Chewy

Chewy, Inc., together with its subsidiaries, engages in the pure play e-commerce business in the United States. It provides pet food and treats, pet supplies and pet medications, and other pet-health products, as well as pet services for dogs, cats, fish, birds, small pets, horses, and reptiles through its retail websites and mobile applications. The company was founded in 2010 and is based in Plantation, Florida.