PACCAR (NASDAQ:PCAR) and Vroom (NASDAQ:VRM) Head-To-Head Review

PACCAR (NASDAQ:PCAR) and Vroom (NASDAQ:VRM) are both auto/tires/trucks companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, earnings, institutional ownership, risk, valuation, profitability and analyst recommendations.

Analyst Recommendations

This is a summary of current recommendations and price targets for PACCAR and Vroom, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PACCAR	0	10	5	1	2.44
Vroom	1	0	0	0	1.00

PACCAR presently has a consensus price target of $122.00, indicating a potential upside of 8.35%. Given PACCAR’s stronger consensus rating and higher probable upside, research analysts plainly believe PACCAR is more favorable than Vroom.

Insider and Institutional Ownership

64.9% of PACCAR shares are held by institutional investors. Comparatively, 25.8% of Vroom shares are held by institutional investors. 2.0% of PACCAR shares are held by insiders. Comparatively, 2.9% of Vroom shares are held 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.

Profitability

This table compares PACCAR and Vroom’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
PACCAR	8.91%	12.81%	5.62%
Vroom	-4.45%	-4.47%	-0.64%

Earnings and Valuation

This table compares PACCAR and Vroom”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PACCAR	$27.78 billion	2.13	$2.38 billion	$4.70	23.96
Vroom	$178.83 million	0.33	-$7.96 million	($8.64)	-1.32

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

Risk and Volatility

PACCAR has a beta of 1.02, meaning that its share price is 2% more volatile than the S&P 500. Comparatively, Vroom has a beta of 1.25, meaning that its share price is 25% more volatile than the S&P 500.

Summary

PACCAR beats Vroom on 13 of the 15 factors compared between the two stocks.

About PACCAR

PACCAR Inc designs, manufactures, and distributes light, medium, and heavy-duty commercial trucks in the United States, Canada, Europe, Mexico, South America, Australia, and internationally. It operates through three segments: Truck, Parts, and Financial Services. The Truck segment designs, manufactures, and distributes trucks for the over-the-road and off-highway hauling of commercial and consumer goods. It sells its trucks through a network of independent dealers under the Kenworth, Peterbilt, and DAF nameplates. The Parts segment distributes aftermarket parts for trucks and related commercial vehicles. The Financial Services segment conducts full-service leasing operations under the PacLease trade name, as well as provides finance and leasing products and services to customers and dealers. This segment also offers equipment financing and administrative support services for its franchisees; retail loan and leasing services for small, medium, and large commercial trucking companies, as well as independent owners/operators and other businesses; and truck inventory financing services to independent dealers. In addition, this segment offers loans and leases directly to customers for the acquisition of trucks and related equipment. The company also manufactures and markets industrial winches under the Braden, Carco, and Gearmatic nameplates. PACCAR Inc was founded in 1905 and is headquartered in Bellevue, Washington.

About Vroom

Vroom, Inc. operates as an automotive finance company. The company offers vehicle financing to its customers through third party dealers under the UACC brand. It also provides artificial intelligence powered analytics and digital services to dealers, automotive financial services companies, and others in the automotive industry for automotive retail. The company was formerly known as Auto America, Inc. and changed its name to Vroom, Inc. in July 2015. Vroom, Inc. was incorporated in 2012 and is based in Houston, Texas.