RideNow Group (NASDAQ:RDNW) & Lithia Motors (NYSE:LAD) Critical Analysis

RideNow Group (NASDAQ:RDNW) and Lithia Motors (NYSE:LAD) are both consumer discretionary companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, profitability, earnings, analyst recommendations, institutional ownership, risk and valuation.

Insider and Institutional Ownership

66.1% of RideNow Group shares are held by institutional investors. 55.3% of RideNow Group shares are held by insiders. Comparatively, 1.1% of Lithia Motors shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares RideNow Group and Lithia Motors”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
RideNow Group	$1.08 billion	0.17	-$52.40 million	($0.23)	-21.09
Lithia Motors	$37.94 billion	0.17	$819.60 million	$30.15	9.66

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

Risk and Volatility

RideNow Group has a beta of 1.29, indicating that its share price is 29% more volatile than the S&P 500. Comparatively, Lithia Motors has a beta of 1.27, indicating that its share price is 27% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations for RideNow Group and Lithia Motors, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
RideNow Group	1	2	0	0	1.67
Lithia Motors	0	5	7	0	2.58

RideNow Group currently has a consensus target price of $8.50, suggesting a potential upside of 75.26%. Lithia Motors has a consensus target price of $415.10, suggesting a potential upside of 42.58%. Given RideNow Group’s higher possible upside, research analysts plainly believe RideNow Group is more favorable than Lithia Motors.

Profitability

This table compares RideNow Group and Lithia Motors’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
RideNow Group	-0.76%	N/A	-1.17%
Lithia Motors	1.88%	12.16%	3.14%

Summary

Lithia Motors beats RideNow Group on 9 of the 14 factors compared between the two stocks.

About RideNow Group

RumbleOn, Inc. primarily operates as a powersports retailer in the United States. It operates in two segments, Powersports and Vehicle Transportation Services. The Powersports segment provides new and pre-owned motorcycles, all-terrain vehicles, utility terrain or side-by-side vehicles, personal watercraft, snowmobiles, and other powersports products. It also offers parts, apparel, accessories, finance and insurance products and services, and aftermarket products, as well as repair and maintenance services. The Vehicle Transportation Services segment provides asset-light transportation brokerage services facilitating automobile transportation. The company was formerly known as Smart Server, Inc. and changed its name to RumbleOn, Inc. in February 2017. The company was incorporated in 2013 and is based in Irving, Texas.

About Lithia Motors

Lithia Motors, Inc. operates as an automotive retailer worldwide. It operates in two segments, Vehicle Operations and Financing Operations. The company’s Vehicle Operations segment sells new and used vehicles; provides parts, repair, and maintenance services; vehicle finance; and insurance products. Its Financing Operations segment provides financing to customers buying and leasing retail vehicles. The company sells its products and services through the Driveway and Greencars brand names through a network of locations, e-commerce platforms, and captive finance solutions. Lithia Motors, Inc. was founded in 1946 and is headquartered in Medford, Oregon.