Five Below (NASDAQ:FIVE) and Lithia Motors (NYSE:LAD) Financial Analysis

Lithia Motors (NYSE:LAD) and Five Below (NASDAQ:FIVE) are both consumer discretionary companies, but which is the better investment? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, profitability, risk, earnings and valuation.

Volatility & Risk

Lithia Motors has a beta of 1.3, meaning that its share price is 30% more volatile than the S&P 500. Comparatively, Five Below has a beta of 0.9, meaning that its share price is 10% less volatile than the S&P 500.

Earnings and Valuation

This table compares Lithia Motors and Five Below”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lithia Motors	$38.21 billion	0.18	$819.60 million	$34.76	9.00
Five Below	$4.76 billion	2.90	$358.64 million	$11.14	22.51

Lithia Motors has higher revenue and earnings than Five Below. Lithia Motors is trading at a lower price-to-earnings ratio than Five Below, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Lithia Motors and Five Below, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lithia Motors	0	6	6	0	2.50
Five Below	0	13	19	0	2.59

Lithia Motors currently has a consensus target price of $393.80, indicating a potential upside of 25.89%. Five Below has a consensus target price of $301.90, indicating a potential upside of 20.40%. Given Lithia Motors’ higher possible upside, equities analysts plainly believe Lithia Motors is more favorable than Five Below.

Profitability

This table compares Lithia Motors and Five Below’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Lithia Motors	2.06%	12.05%	3.03%
Five Below	11.65%	22.13%	9.86%

Summary

Five Below beats Lithia Motors on 7 of the 12 factors compared between the two stocks.

About Lithia Motors

Lithia Motors, Inc. is an automotive retailer that sells new and pre-owned vehicles through a network of franchised dealerships. Its dealerships represent a range of vehicle manufacturers and also offer related products and services, including parts, maintenance and repairs, and vehicle financing and insurance options. The company traces its roots to a single dealership established in Ashland, Oregon, in 1946. It has since expanded its retail operations across the United States, Canada and the United Kingdom.

About Five Below

Five Below, Inc. is a U.S. discount retailer offering a changing assortment of value-priced products for teens, tweens, and families. Its merchandise spans toys and games, technology accessories, sports and recreation, fashion and accessories, home goods, party supplies, seasonal items, and candy. The company was founded in 2002 by David Schlessinger and Tom Vellios, and opened its first store in Wayne, Pennsylvania. While its name reflects its original focus on products priced at $5 or less, Five Below has expanded its assortment to include higher-priced items through its Five Beyond offering.