Critical Contrast: ARKO (NASDAQ:ARKO) and RideNow Group (NASDAQ:RDNW)

RideNow Group (NASDAQ:RDNW) and ARKO (NASDAQ:ARKO) are both small-cap consumer discretionary companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, dividends, risk, institutional ownership, profitability, valuation and earnings.

Institutional and Insider Ownership

66.1% of RideNow Group shares are owned by institutional investors. Comparatively, 78.3% of ARKO shares are owned by institutional investors. 55.3% of RideNow Group shares are owned by insiders. Comparatively, 21.9% of ARKO shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for RideNow Group and ARKO, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
RideNow Group	1	2	0	0	1.67
ARKO	2	0	1	0	1.67

RideNow Group currently has a consensus price target of $8.50, indicating a potential upside of 74.18%. ARKO has a consensus price target of $14.50, indicating a potential upside of 245.24%. Given ARKO’s higher possible upside, analysts clearly believe ARKO is more favorable than RideNow Group.

Profitability

This table compares RideNow Group and ARKO’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
RideNow Group	-0.76%	N/A	-1.17%
ARKO	0.19%	4.02%	0.41%

Valuation and Earnings

This table compares RideNow Group and ARKO”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
RideNow Group	$1.08 billion	0.18	-$52.40 million	($0.23)	-21.22
ARKO	$7.64 billion	0.06	$22.74 million	$0.07	60.00

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

Risk and Volatility

RideNow Group has a beta of 1.29, meaning that its share price is 29% more volatile than the S&P 500. Comparatively, ARKO has a beta of 0.93, meaning that its share price is 7% less volatile than the S&P 500.

Summary

ARKO beats RideNow Group on 10 of the 13 factors compared between the two stocks.

About RideNow Group

RumbleOn, Inc. primarily operates as a powersports retailer in the United States. It operates in two segments, Powersports and Vehicle Transportation Services. The Powersports segment provides new and pre-owned motorcycles, all-terrain vehicles, utility terrain or side-by-side vehicles, personal watercraft, snowmobiles, and other powersports products. It also offers parts, apparel, accessories, finance and insurance products and services, and aftermarket products, as well as repair and maintenance services. The Vehicle Transportation Services segment provides asset-light transportation brokerage services facilitating automobile transportation. The company was formerly known as Smart Server, Inc. and changed its name to RumbleOn, Inc. in February 2017. The company was incorporated in 2013 and is based in Irving, Texas.

About ARKO

Arko Corp. operates convenience stores in the United States. It operates through Retail, Wholesale, Fleet Fueling, and GPMP segments. The Retail segment engages in the sale of fuel and merchandise to retail consumers. Its Wholesale segment supplies fuel to third-party dealers and consignment agents. The Fleet Fueling segment supplies fuel to proprietary and third-party cardlock, and issuance of proprietary fuel cards. Its GPMP segment supplies fuel to retail and wholesale segments. The company is based in Richmond, Virginia.