Analyzing Group 1 Automotive (NYSE:GPI) and GrowGeneration (NASDAQ:GRWG)

GrowGeneration (NASDAQ:GRWG) and Group 1 Automotive (NYSE:GPI) are both consumer discretionary companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, profitability, earnings, dividends, risk and institutional ownership.

Earnings & Valuation

This table compares GrowGeneration and Group 1 Automotive”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
GrowGeneration	$161.74 million	0.55	-$24.05 million	($0.27)	-5.56
Group 1 Automotive	$22.57 billion	0.14	$325.20 million	$31.60	8.25

Group 1 Automotive has higher revenue and earnings than GrowGeneration. GrowGeneration is trading at a lower price-to-earnings ratio than Group 1 Automotive, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

GrowGeneration has a beta of 2.54, indicating that its share price is 154% more volatile than the S&P 500. Comparatively, Group 1 Automotive has a beta of 0.92, indicating that its share price is 8% less volatile than the S&P 500.

Profitability

This table compares GrowGeneration and Group 1 Automotive’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
GrowGeneration	-10.07%	-17.44%	-11.52%
Group 1 Automotive	1.75%	15.18%	4.24%

Analyst Ratings

This is a summary of current recommendations and price targets for GrowGeneration and Group 1 Automotive, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
GrowGeneration	1	1	1	0	2.00
Group 1 Automotive	2	3	5	0	2.30

GrowGeneration presently has a consensus target price of $2.50, suggesting a potential upside of 66.67%. Group 1 Automotive has a consensus target price of $338.11, suggesting a potential upside of 29.74%. Given GrowGeneration’s higher possible upside, equities research analysts clearly believe GrowGeneration is more favorable than Group 1 Automotive.

Insider and Institutional Ownership

36.0% of GrowGeneration shares are owned by institutional investors. Comparatively, 99.9% of Group 1 Automotive shares are owned by institutional investors. 8.1% of GrowGeneration shares are owned by insiders. Comparatively, 2.4% of Group 1 Automotive shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

Group 1 Automotive beats GrowGeneration on 10 of the 14 factors compared between the two stocks.

About GrowGeneration

GrowGeneration Corp., through its subsidiaries, owns and operates retail hydroponic and organic gardening stores in the United States. The company engages in the marketing and distribution of nutrients, additives, growing media, lighting, and environmental control systems, as well as other indoor and outdoor growing products. It operates a chain of stores in California, Colorado, Michigan, Maine, Oklahoma, Oregon, Washington, Montana, New York, Ohio, Mississippi, Missouri, Arizona, Rhode Island, Florida, Massachusetts, Virginia, New Jersey, and New Mexico, as well as growgeneration.com, an online superstore for cultivators, a wholesale business for resellers, HRG Distribution, and benching, racking, and storage solutions and MMI. The company was formerly known as Easylife Corp. GrowGeneration Corp. was founded in 2008 and is based in Greenwood Village, Colorado.

About Group 1 Automotive

Group 1 Automotive, Inc., through its subsidiaries, operates in the automotive retail industry in the United States and the United Kingdom. The company sells new and used cars, light trucks, and vehicle parts, as well as service and insurance contracts; arranges related vehicle financing; and offers automotive maintenance and repair services. Group 1 Automotive, Inc. was incorporated in 1995 and is headquartered in Houston, Texas.