Analyzing ThredUp (NASDAQ:TDUP) and Sonic Automotive (NYSE:SAH)

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

Analyst Ratings

This is a breakdown of current ratings for Sonic Automotive and ThredUp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sonic Automotive	3	3	4	0	2.10
ThredUp	1	2	3	1	2.57

Sonic Automotive presently has a consensus price target of $81.62, indicating a potential upside of 35.47%. ThredUp has a consensus price target of $4.64, indicating a potential upside of 209.33%. Given ThredUp’s stronger consensus rating and higher possible upside, analysts clearly believe ThredUp is more favorable than Sonic Automotive.

Insider and Institutional Ownership

46.9% of Sonic Automotive shares are held by institutional investors. Comparatively, 89.1% of ThredUp shares are held by institutional investors. 43.7% of Sonic Automotive shares are held by company insiders. Comparatively, 23.1% of ThredUp shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Sonic Automotive and ThredUp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sonic Automotive	1.33%	20.05%	3.32%
ThredUp	-6.89%	-39.12%	-13.81%

Risk and Volatility

Sonic Automotive has a beta of 0.98, meaning that its share price is 2% less volatile than the S&P 500. Comparatively, ThredUp has a beta of 2.18, meaning that its share price is 118% more volatile than the S&P 500.

Valuation and Earnings

This table compares Sonic Automotive and ThredUp”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sonic Automotive	$15.48 billion	0.12	$118.70 million	$6.22	9.69
ThredUp	$340.37 million	0.58	-$20.21 million	($0.18)	-8.33

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

Summary

Sonic Automotive beats ThredUp on 9 of the 15 factors compared between the two stocks.

About Sonic Automotive

Sonic Automotive, Inc. is a U.S. automotive retailer that sells new and used vehicles through franchised dealerships and its EchoPark used-vehicle business. Its dealerships represent a range of automotive manufacturers and serve customers in multiple states. The company also provides automotive services, including vehicle maintenance and repair, collision repair, parts sales, and financing and insurance products. EchoPark focuses on the sale of pre-owned vehicles. Founded in 1997 by automotive entrepreneur O. Bruton Smith, Sonic Automotive is headquartered in Charlotte, North Carolina.

About ThredUp

ThredUp, Inc. operates an online resale platform for secondhand clothing, shoes, handbags and accessories. The company offers shoppers a range of pre-owned items from various brands and provides a way for people to resell eligible clothing through its platform. Through its consignment service, ThredUp handles much of the resale process, including receiving and inspecting items, photographing and listing them, and fulfilling purchases. It also works with brands and retailers through resale programs that support the resale of their products.