Comparing Chewy (NYSE:CHWY) and Lithia Motors (NYSE:LAD)

Lithia Motors (NYSE:LAD) and Chewy (NYSE:CHWY) are both mid-cap consumer discretionary companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, dividends, valuation, risk, profitability, institutional ownership and earnings.

Analyst Ratings

This is a summary of current ratings for Lithia Motors and Chewy, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lithia Motors	0	6	6	0	2.50
Chewy	0	8	16	1	2.72

Lithia Motors presently has a consensus price target of $393.80, suggesting a potential upside of 32.41%. Chewy has a consensus price target of $30.45, suggesting a potential upside of 34.01%. Given Chewy’s stronger consensus rating and higher possible upside, analysts clearly believe Chewy is more favorable than Lithia Motors.

Earnings and Valuation

This table compares Lithia Motors and Chewy”s top-line 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	0.17	$819.60 million	$34.76	8.56
Chewy	$12.60 billion	0.72	$222.80 million	$0.66	34.43

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

Insider and Institutional Ownership

93.1% of Chewy shares are owned by institutional investors. 1.1% of Lithia Motors shares are owned by company insiders. Comparatively, 0.3% of Chewy shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Lithia Motors and Chewy’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%
Chewy	2.09%	60.88%	7.83%

Volatility and Risk

Lithia Motors has a beta of 1.3, meaning that its share price is 30% more volatile than the S&P 500. Comparatively, Chewy has a beta of 1.33, meaning that its share price is 33% more volatile than the S&P 500.

Summary

Chewy beats Lithia Motors on 11 of the 15 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 Chewy

Chewy, Inc. is an online retailer focused on pet food, supplies and related services. Through its website and mobile app, the company sells products for dogs, cats and other pets, including food, treats, toys, bedding and grooming supplies. Chewy also offers pet medications and health products through Chewy Pharmacy, along with services such as veterinary care. Its business combines product sales with services designed to support pet owners throughout their pets’ lives. Founded in 2011, Chewy primarily serves customers in the United States.