Analyzing Alphabet (NASDAQ:GOOG) and Cars.com (NYSE:CARS)

Cars.com (NYSE:CARS) and Alphabet (NASDAQ:GOOG) are both communication services companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, analyst recommendations, profitability, institutional ownership, risk, dividends and earnings.

Valuation and Earnings

This table compares Cars.com and Alphabet”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cars.com	$723.24 million	0.82	$20.05 million	$0.57	19.53
Alphabet	$402.84 billion	10.46	$132.17 billion	$19.91	17.30

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

Risk and Volatility

Cars.com has a beta of 1.59, indicating that its share price is 59% more volatile than the S&P 500. Comparatively, Alphabet has a beta of 1.21, indicating that its share price is 21% more volatile than the S&P 500.

Insider & Institutional Ownership

89.2% of Cars.com shares are held by institutional investors. Comparatively, 27.3% of Alphabet shares are held by institutional investors. 3.4% of Cars.com shares are held by insiders. Comparatively, 13.0% of Alphabet shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Cars.com and Alphabet, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cars.com	0	5	3	0	2.38
Alphabet	0	4	30	6	3.05

Cars.com currently has a consensus price target of $14.83, suggesting a potential upside of 33.24%. Alphabet has a consensus price target of $415.55, suggesting a potential upside of 20.65%. Given Cars.com’s higher probable upside, equities analysts plainly believe Cars.com is more favorable than Alphabet.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Cars.com	4.73%	18.82%	8.31%
Alphabet	54.77%	51.32%	35.42%

Summary

Alphabet beats Cars.com on 11 of the 15 factors compared between the two stocks.

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.

About Alphabet

Alphabet Inc. offers various products and platforms in the United States, Europe, the Middle East, Africa, the Asia-Pacific, Canada, and Latin America. It operates through Google Services, Google Cloud, and Other Bets segments. The Google Services segment provides products and services, including ads, Android, Chrome, devices, Gmail, Google Drive, Google Maps, Google Photos, Google Play, Search, and YouTube. It is also involved in the sale of apps and in-app purchases and digital content in the Google Play and YouTube; and devices, as well as in the provision of YouTube consumer subscription services. The Google Cloud segment offers infrastructure, cybersecurity, databases, analytics, AI, and other services; Google Workspace that include cloud-based communication and collaboration tools for enterprises, such as Gmail, Docs, Drive, Calendar, and Meet; and other services for enterprise customers. The Other Bets segment sells healthcare-related and internet services. The company was incorporated in 1998 and is headquartered in Mountain View, California.