Financial Survey: CarMax (NYSE:KMX) versus Tandy Leather Factory (NASDAQ:TLF)

CarMax (NYSE:KMX) and Tandy Leather Factory (NASDAQ:TLF) are both consumer discretionary companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, earnings, profitability, dividends, analyst recommendations, risk and institutional ownership.

Insider and Institutional Ownership

56.4% of Tandy Leather Factory shares are owned by institutional investors. 1.0% of CarMax shares are owned by insiders. Comparatively, 36.2% of Tandy Leather Factory shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Earnings and Valuation

This table compares CarMax and Tandy Leather Factory”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CarMax	$25.88 billion	0.35	$247.29 million	$1.53	41.33
Tandy Leather Factory	$76.32 million	0.28	$9.10 million	($0.17)	-15.41

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

Profitability

This table compares CarMax and Tandy Leather Factory’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
CarMax	0.84%	6.64%	1.53%
Tandy Leather Factory	-2.14%	-3.31%	-1.98%

Analyst Ratings

This is a breakdown of current recommendations for CarMax and Tandy Leather Factory, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CarMax	3	14	2	1	2.05
Tandy Leather Factory	1	0	0	0	1.00

CarMax currently has a consensus target price of $51.00, indicating a potential downside of 19.35%. Given CarMax’s stronger consensus rating and higher probable upside, analysts clearly believe CarMax is more favorable than Tandy Leather Factory.

Risk and Volatility

CarMax has a beta of 1.17, indicating that its share price is 17% more volatile than the S&P 500. Comparatively, Tandy Leather Factory has a beta of 0.5, indicating that its share price is 50% less volatile than the S&P 500.

Summary

CarMax beats Tandy Leather Factory on 13 of the 15 factors compared between the two stocks.

About CarMax

CarMax, Inc., through its subsidiaries, operates as a retailer of used vehicles and related products in the United States. It operates in two segments: CarMax Sales Operations and CarMax Auto Finance. The CarMax Sales Operations segment offers customers a range of makes and models of used vehicles, including domestic, imported, and luxury vehicles, as well as hybrid and electric vehicles; used vehicle auctions; extended protection plans to customers at the time of sale; and reconditioning and vehicle repair services. The CarMax Auto Finance segment provides financing alternatives for retail customers across a range of credit spectrum and arrangements with various financial institutions. The company was founded in 1993 and is based in Richmond, Virginia.

About Tandy Leather Factory

Tandy Leather Factory, Inc. engages in the distribution of leather and related products. It offers leather, leatherworking tools, buckles and adornments for belts, leather dyes and finishes, saddle and tack hardware, and do-it-yourself kits. It operates through North America and International geographical segments. The North America geographical segment consists of 115 stores, which offer a broad selection of products combined with leathercraft expertise in a one-stop shop. The International geographical segment comprises of similar to North America segment but generally located in light industrial areas. The company was founded by J. Wray Thompson, Sr. and Ronald C. Morgan in 1980 and is headquartered in Fort Worth, TX.