Critical Analysis: Chewy (NYSE:CHWY) versus America’s Car-Mart (NASDAQ:CRMT)

Chewy (NYSE:CHWY) and America’s Car-Mart (NASDAQ:CRMT) are both consumer discretionary companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, institutional ownership, dividends, analyst recommendations, valuation, profitability and earnings.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Chewy and America’s Car-Mart, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Chewy	0	8	16	1	2.72
America’s Car-Mart	1	2	0	0	1.67

Chewy currently has a consensus price target of $30.45, indicating a potential upside of 38.81%. America’s Car-Mart has a consensus price target of $14.00, indicating a potential upside of 1,657.03%. Given America’s Car-Mart’s higher probable upside, analysts clearly believe America’s Car-Mart is more favorable than Chewy.

Profitability

This table compares Chewy and America’s Car-Mart’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Chewy	2.09%	60.88%	7.83%
America’s Car-Mart	-18.21%	-15.19%	-4.73%

Institutional and Insider Ownership

93.1% of Chewy shares are owned by institutional investors. Comparatively, 89.1% of America’s Car-Mart shares are owned by institutional investors. 0.3% of Chewy shares are owned by insiders. Comparatively, 18.4% of America’s Car-Mart shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Chewy and America’s Car-Mart”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Chewy	$13.07 billion	0.67	$222.80 million	$0.66	33.24
America’s Car-Mart	$1.28 billion	0.01	-$139.11 million	($23.80)	-0.03

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

Risk & Volatility

Chewy has a beta of 1.38, indicating that its share price is 38% more volatile than the S&P 500. Comparatively, America’s Car-Mart has a beta of 1.34, indicating that its share price is 34% more volatile than the S&P 500.

Summary

Chewy beats America’s Car-Mart on 13 of the 15 factors compared between the two stocks.

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.

About America’s Car-Mart

America’s Car-Mart, Inc., through its subsidiaries, operates as an automotive retailer for the used car market in the United States. It primarily sells older model used vehicles and provides financing for its customers. The company was founded in 1981 and is headquartered in Rogers, Arkansas.