Carvana (NYSE:CVNA) and O’Reilly Automotive (NASDAQ:ORLY) Financial Analysis

Carvana (NYSE:CVNA) and O’Reilly Automotive (NASDAQ:ORLY) are both large-cap consumer discretionary companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, analyst recommendations, earnings, dividends, valuation, profitability and institutional ownership.

Profitability

This table compares Carvana and O’Reilly Automotive’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Carvana	6.26%	37.06%	12.21%
O’Reilly Automotive	14.27%	-232.45%	15.79%

Institutional & Insider Ownership

56.7% of Carvana shares are held by institutional investors. Comparatively, 85.0% of O’Reilly Automotive shares are held by institutional investors. 15.2% of Carvana shares are held by insiders. Comparatively, 0.8% of O’Reilly Automotive shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Risk and Volatility

Carvana has a beta of 3.46, meaning that its share price is 246% more volatile than the S&P 500. Comparatively, O’Reilly Automotive has a beta of 0.51, meaning that its share price is 49% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Carvana and O’Reilly Automotive, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Carvana	0	7	16	1	2.75
O’Reilly Automotive	0	2	15	1	2.94

Carvana currently has a consensus price target of $84.14, suggesting a potential upside of 13.49%. O’Reilly Automotive has a consensus price target of $107.24, suggesting a potential upside of 22.09%. Given O’Reilly Automotive’s stronger consensus rating and higher probable upside, analysts clearly believe O’Reilly Automotive is more favorable than Carvana.

Earnings and Valuation

This table compares Carvana and O’Reilly Automotive”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Carvana	$25.06 billion	3.26	$1.41 billion	$1.81	40.96
O’Reilly Automotive	$17.78 billion	4.00	$2.54 billion	$3.14	27.97

O’Reilly Automotive has lower revenue, but higher earnings than Carvana. O’Reilly Automotive is trading at a lower price-to-earnings ratio than Carvana, indicating that it is currently the more affordable of the two stocks.

Summary

O’Reilly Automotive beats Carvana on 8 of the 14 factors compared between the two stocks.

About Carvana

Carvana Co., together with its subsidiaries, operates an e-commerce platform for buying and selling used cars in the United States. Its platform allows customers to research and identify a vehicle; inspect it using company's 360-degree vehicle imaging technology; obtain financing and warranty coverage; purchase the vehicle; and schedule delivery or pick-up from their desktop or mobile devices. The company also operates auction sites. The company was founded in 2012 and is based in Tempe, Arizona.

About O’Reilly Automotive

O’Reilly Automotive, Inc., together with its subsidiaries, operates as a retailer and supplier of automotive aftermarket parts, tools, supplies, equipment, and accessories in the United States, Puerto Rico, and Mexico. The company provides new and remanufactured automotive hard parts and maintenance items, such as alternators, batteries, brake system components, belts, chassis parts, driveline parts, engine parts, fuel pumps, hoses, starters, temperature control, water pumps, antifreeze, appearance products, engine additives, filters, fluids, lighting products, and oil and wiper blades; and accessories, including floor mats, seat covers, and truck accessories. It also offers auto body paint and related materials, automotive tools, and professional service provider service equipment. In addition, the company provide enhanced services and programs comprising used oil, oil filter, and battery recycling; battery, wiper, and bulb replacement; battery diagnostic testing; electrical and module testing; check engine light code extraction; loaner tool program; drum and rotor resurfacing; custom hydraulic hoses; and professional paint shop mixing and related materials. Further, it offers do-it-yourself and professional service for domestic and imported automobiles, vans, and trucks. The company was founded in 1957 and is headquartered in Springfield, Missouri.