Sonic Automotive (NYSE:SAH) & Barnes & Noble Education (NYSE:BNED) Head to Head Survey

Sonic Automotive (NYSE:SAH) and Barnes & Noble Education (NYSE:BNED) are both small-cap consumer discretionary companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, risk, profitability, analyst recommendations, valuation, earnings and dividends.

Valuation & Earnings

This table compares Sonic Automotive and Barnes & Noble Education”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sonic Automotive	$15.15 billion	0.13	$118.70 million	$6.27	9.66
Barnes & Noble Education	$1.71 billion	0.24	$16.87 million	$0.64	18.20

Sonic Automotive has higher revenue and earnings than Barnes & Noble Education. Sonic Automotive is trading at a lower price-to-earnings ratio than Barnes & Noble Education, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current ratings and target prices for Sonic Automotive and Barnes & Noble Education, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sonic Automotive	2	4	4	0	2.20
Barnes & Noble Education	1	1	2	0	2.25

Sonic Automotive currently has a consensus target price of $98.88, suggesting a potential upside of 63.20%. Barnes & Noble Education has a consensus target price of $17.25, suggesting a potential upside of 48.07%. Given Sonic Automotive’s higher possible upside, analysts plainly believe Sonic Automotive is more favorable than Barnes & Noble Education.

Dividends

Sonic Automotive pays an annual dividend of $1.64 per share and has a dividend yield of 2.7%. Barnes & Noble Education pays an annual dividend of $0.32 per share and has a dividend yield of 2.7%. Sonic Automotive pays out 26.2% of its earnings in the form of a dividend. Barnes & Noble Education pays out 50.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Sonic Automotive has raised its dividend for 4 consecutive years.

Profitability

This table compares Sonic Automotive and Barnes & Noble Education’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sonic Automotive	1.37%	20.75%	3.51%
Barnes & Noble Education	1.29%	8.77%	2.66%

Insider and Institutional Ownership

46.9% of Sonic Automotive shares are held by institutional investors. Comparatively, 38.5% of Barnes & Noble Education shares are held by institutional investors. 43.7% of Sonic Automotive shares are held by insiders. Comparatively, 1.7% of Barnes & Noble Education shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Volatility and Risk

Sonic Automotive has a beta of 0.86, suggesting that its stock price is 14% less volatile than the S&P 500. Comparatively, Barnes & Noble Education has a beta of 1.27, suggesting that its stock price is 27% more volatile than the S&P 500.

Summary

Sonic Automotive beats Barnes & Noble Education on 12 of the 17 factors compared between the two stocks.

About Sonic Automotive

Sonic Automotive, Inc. operates as an automotive retailer in the United States. It operates in three segments, Franchised Dealerships, EchoPark, and Powersports. The Franchised Dealerships segment is involved in the sale of new and used cars and light trucks, and replacement parts; provision of vehicle maintenance, manufacturer warranty repair, and paint and collision repair services; and arrangement of extended warranties, service contracts, financing, insurance, and other aftermarket products for its guests. The EchoPark segment sells used cars and light trucks; and arranges finance and insurance product sales for its guests in pre-owned vehicle specialty retail locations. The Powersports Segment sells new and used powersports vehicles, such as motorcycles, and personal watercraft and all-terrain vehicles; and offers finance and insurance services. The company was incorporated in 1997 and is based in Charlotte, North Carolina.

About Barnes & Noble Education

Barnes and Noble Education, Inc. engages in the management and operation of bookstore chains in universities. It operates through the Retail and Wholesale segments. The Retail segment operates college, university, and K-12 school bookstores, physical bookstores, and virtual bookstores. The Wholesale segment sells and distributes new and used textbooks to physical bookstores. The company was founded by Leonard S, Riggio in 1965 and is headquartered in Basking Ridge, NJ.