Critical Analysis: Carvana (NYSE:CVNA) and Tandy Leather Factory (NASDAQ:TLF)

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

Profitability

This table compares Carvana and Tandy Leather Factory’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%
Tandy Leather Factory	-2.14%	-3.31%	-1.98%

Volatility and Risk

Carvana has a beta of 3.49, meaning that its stock price is 249% more volatile than the S&P 500. Comparatively, Tandy Leather Factory has a beta of 0.5, meaning that its stock price is 50% less volatile than the S&P 500.

Insider and Institutional Ownership

56.7% of Carvana shares are owned by institutional investors. Comparatively, 56.4% of Tandy Leather Factory shares are owned by institutional investors. 15.2% of Carvana shares are owned by company insiders. Comparatively, 36.2% of Tandy Leather Factory shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of recent ratings for Carvana and Tandy Leather Factory, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Carvana	0	7	16	1	2.75
Tandy Leather Factory	1	0	0	0	1.00

Carvana currently has a consensus price target of $84.14, suggesting a potential upside of 14.49%. Given Carvana’s stronger consensus rating and higher possible upside, equities analysts clearly believe Carvana is more favorable than Tandy Leather Factory.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Carvana	$20.32 billion	3.98	$1.41 billion	$1.81	40.60
Tandy Leather Factory	$77.21 million	0.28	$9.10 million	($0.17)	-15.59

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

Summary

Carvana beats Tandy Leather Factory on 14 of the 15 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 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.