Financial Analysis: Yalla Group (NYSE:YALA) vs. Cars.com (NYSE:CARS)

Yalla Group (NYSE:YALA) and Cars.com (NYSE:CARS) are both small-cap communication services companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, risk, analyst recommendations, earnings, dividends and profitability.

Profitability

This table compares Yalla Group and Cars.com’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Yalla Group	40.78%	16.82%	15.14%
Cars.com	4.73%	18.82%	8.31%

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Yalla Group and Cars.com, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Yalla Group	0	1	0	0	2.00
Cars.com	0	5	3	0	2.38

Cars.com has a consensus target price of $14.58, indicating a potential upside of 53.11%. Given Cars.com’s stronger consensus rating and higher possible upside, analysts plainly believe Cars.com is more favorable than Yalla Group.

Risk & Volatility

Yalla Group has a beta of 0.4, indicating that its stock price is 60% less volatile than the S&P 500. Comparatively, Cars.com has a beta of 1.64, indicating that its stock price is 64% more volatile than the S&P 500.

Institutional & Insider Ownership

4.7% of Yalla Group shares are owned by institutional investors. Comparatively, 89.2% of Cars.com shares are owned by institutional investors. 52.2% of Yalla Group shares are owned by insiders. Comparatively, 3.4% of Cars.com shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Yalla Group and Cars.com”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Yalla Group	$335.11 million	2.56	$149.84 million	$0.77	7.29
Cars.com	$725.63 million	0.70	$20.05 million	$0.57	16.71

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

Summary

Cars.com beats Yalla Group on 8 of the 14 factors compared between the two stocks.

About Yalla Group

Yalla Group Limited operates a social networking and gaming platform primarily in the Middle East and North Africa region. It provides mobile applications, including Yalla, a voice-centric group chat platform; and Yalla Ludo, a casual gaming application. The company’s platform offers group chatting and games services; and sells virtual items, as well as provides upgrade services. The company was formerly known as FYXTech Corporation. Yalla Group Limited was founded in 2016 and is headquartered in Dubai, the United Arab Emirates.

About Cars.com

Cars.com Inc., through its subsidiaries, operates as a digital automotive marketplace that connects local car dealers to consumers in the United States. The company offers a suite of digital solutions that creates connections between individuals researching cars or looking to purchase a car with car dealerships and automotive original equipment manufacturers. It also sells online subscription advertising products to car dealerships by its direct sales force, as well as through its affiliate sales channel. In addition, the company sells display advertising to national advertisers. Further, it offers online automotive marketplace service that connects buyers and sellers through Cars.com, Auto.com, DealerRater.com, NewCars.com, PickupTrucks.com, DealerInspire.com, and LaunchDigitalMarketing.com Websites. Its platform hosts approximately 4.9 million new and used vehicle listings and serves approximately 20,000 franchise and independent car dealers. Cars.com Inc. was founded in 1998 and is headquartered in Chicago, Illinois.