Critical Contrast: Cars.com (NYSE:CARS) vs. Zillow Group (NASDAQ:ZG)

Zillow Group (NASDAQ:ZG) and Cars.com (NYSE:CARS) are both communication services companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, institutional ownership, profitability, dividends, analyst recommendations, risk and valuation.

Volatility & Risk

Zillow Group has a beta of 2.02, indicating that its stock price is 102% more volatile than the S&P 500. Comparatively, Cars.com has a beta of 1.66, indicating that its stock price is 66% more volatile than the S&P 500.

Insider & Institutional Ownership

20.3% of Zillow Group shares are owned by institutional investors. Comparatively, 89.2% of Cars.com shares are owned by institutional investors. 29.9% of Zillow Group shares are owned by insiders. Comparatively, 3.4% of Cars.com shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Zillow Group and Cars.com’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Zillow Group	1.96%	2.32%	1.97%
Cars.com	4.73%	18.82%	8.31%

Analyst Ratings

This is a summary of recent ratings and target prices for Zillow Group and Cars.com, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Zillow Group	1	12	10	0	2.39
Cars.com	0	4	3	1	2.62

Zillow Group currently has a consensus price target of $51.10, indicating a potential upside of 50.90%. Cars.com has a consensus price target of $14.58, indicating a potential upside of 24.70%. Given Zillow Group’s higher possible upside, equities research analysts clearly believe Zillow Group is more favorable than Cars.com.

Earnings and Valuation

This table compares Zillow Group and Cars.com”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Zillow Group	$2.81 billion	2.71	$23.00 million	$0.22	153.91
Cars.com	$723.24 million	0.87	$20.05 million	$0.57	20.52

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

Summary

Zillow Group beats Cars.com on 8 of the 15 factors compared between the two stocks.

About Zillow Group

Zillow Group, Inc. operates real estate brands in mobile applications and Websites in the United States. The company offers premier agent and rentals marketplaces, new construction marketplaces, advertising, display advertising, and business technology solutions, as well as dotloop and floor plans. It also provides mortgage originations and the sale of mortgages, and advertising to mortgage lenders and other mortgage professionals; and title and escrow services. In addition, the company's brand portfolio includes Zillow Premier Agent, Zillow Home Loans, Zillow Rentals, Trulia, StreetEasy, HotPads, and Out East; and a suite of marketing software and technology solutions for the real estate industry, including ShowingTime+, Spruce, and Follow Up Boss. Zillow Group, Inc. was incorporated in 2004 and is headquartered in Seattle, Washington.

About Cars.com

Cars.com Inc., through its subsidiaries, operates as a digital automotive marketplace that connects local car dealers to consumers in the United States. The company offers a suite of digital solutions that creates connections between individuals researching cars or looking to purchase a car with car dealerships and automotive original equipment manufacturers. It also sells online subscription advertising products to car dealerships by its direct sales force, as well as through its affiliate sales channel. In addition, the company sells display advertising to national advertisers. Further, it offers online automotive marketplace service that connects buyers and sellers through Cars.com, Auto.com, DealerRater.com, NewCars.com, PickupTrucks.com, DealerInspire.com, and LaunchDigitalMarketing.com Websites. Its platform hosts approximately 4.9 million new and used vehicle listings and serves approximately 20,000 franchise and independent car dealers. Cars.com Inc. was founded in 1998 and is headquartered in Chicago, Illinois.