Analyzing Vroom (NASDAQ:VRM) & FirstCash (NASDAQ:FCFS)

Vroom (NASDAQ:VRM) and FirstCash (NASDAQ:FCFS) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, institutional ownership, profitability, analyst recommendations, risk, dividends and valuation.

Volatility & Risk

Vroom has a beta of 1.23, indicating that its stock price is 23% more volatile than the S&P 500. Comparatively, FirstCash has a beta of 0.53, indicating that its stock price is 47% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings for Vroom and FirstCash, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Vroom	1	0	0	0	1.00
FirstCash	0	1	4	0	2.80

FirstCash has a consensus target price of $249.00, suggesting a potential upside of 10.53%. Given FirstCash’s stronger consensus rating and higher probable upside, analysts plainly believe FirstCash is more favorable than Vroom.

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Vroom	$10.09 million	5.33	-$7.96 million	($11.12)	-0.92
FirstCash	$3.66 billion	2.67	$330.38 million	$8.76	25.72

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

Insider and Institutional Ownership

25.8% of Vroom shares are held by institutional investors. Comparatively, 80.3% of FirstCash shares are held by institutional investors. 2.9% of Vroom shares are held by insiders. Comparatively, 2.9% of FirstCash shares are held 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Vroom	-32.38%	-47.65%	-5.59%
FirstCash	9.42%	19.65%	8.38%

Summary

FirstCash beats Vroom on 11 of the 14 factors compared between the two stocks.

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.

About FirstCash

FirstCash Holdings, Inc, together with its subsidiaries, operates retail pawn stores in the United States, Mexico, and rest of Latin America. The company operates in three segments: U.S. Pawn, Latin America Pawn, and Retail POS Payment Solutions segments. Its pawn stores lend money on the collateral of pledged personal property, including jewelry, electronics, tools, appliances, sporting goods, and musical instruments; and retails merchandise acquired through collateral forfeitures on forfeited pawn loans and over-the-counter purchases of merchandise directly from customers. The company also provides retail POS payment solutions, which focuses on LTO products and facilitating other retail financing payment options across the network of traditional and e-commerce merchant partners. It serves cash and credit-constrained consumers. The company was formerly known as FirstCash, Inc and changed its name to FirstCash Holdings, Inc. in December 2021. FirstCash Holdings, Inc was incorporated in 1988 and is headquartered in Fort Worth, Texas.