Critical Review: Cars.com (NYSE:CARS) versus TripAdvisor (NASDAQ:TRIP)

Cars.com (NYSE:CARS) and TripAdvisor (NASDAQ:TRIP) are both small-cap retail/wholesale companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, earnings, dividends, risk, valuation, institutional ownership and analyst recommendations.

Valuation & Earnings

This table compares Cars.com and TripAdvisor”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cars.com	$723.24 million	0.89	$20.05 million	$0.32	34.42
TripAdvisor	$1.89 billion	0.70	$40.00 million	$0.30	38.27

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

Risk and Volatility

Cars.com has a beta of 1.46, suggesting that its stock price is 46% more volatile than the S&P 500. Comparatively, TripAdvisor has a beta of 0.88, suggesting that its stock price is 12% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Cars.com and TripAdvisor, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cars.com	1	3	4	0	2.38
TripAdvisor	5	7	4	0	1.94

Cars.com presently has a consensus price target of $16.00, indicating a potential upside of 45.26%. TripAdvisor has a consensus price target of $14.68, indicating a potential upside of 27.86%. Given Cars.com’s stronger consensus rating and higher probable upside, analysts clearly believe Cars.com is more favorable than TripAdvisor.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Cars.com	2.77%	17.31%	7.77%
TripAdvisor	2.12%	10.67%	2.52%

Institutional and Insider Ownership

89.2% of Cars.com shares are owned by institutional investors. Comparatively, 99.0% of TripAdvisor shares are owned by institutional investors. 2.1% of Cars.com shares are owned by insiders. Comparatively, 3.1% of TripAdvisor shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

Cars.com beats TripAdvisor on 8 of the 13 factors compared between the two stocks.

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.

About TripAdvisor

TripAdvisor, Inc. operates as an online travel company, primarily engages in the provision of travel guidance products and services worldwide. The company operates in three segments: Brand Tripadvisor, Viator, and TheFork. The Brand Tripadvisor segment offers travel guidance platforms for travelers to discover, generate, and share authentic user-generated content in the form of ratings and reviews for destinations, points-of-interest, experiences, accommodations, restaurants, and cruises. The Viator's segment provides pure-play experiences online travel agency that comprehensive and connecting travelers to discover and book tours, activities, and attractions from experience operators. TheFork segment provides an online marketplace that enables diners to discover and book online reservations at restaurants. TripAdvisor, Inc. was founded in 2000 and is headquartered in Needham, Massachusetts. Tripadvisor, Inc. is a subsidiary of Liberty TripAdvisor Holdings, Inc.