Financial Analysis: Alliance Entertainment (NASDAQ:AENT) vs. Pool (NASDAQ:POOL)

Alliance Entertainment (NASDAQ:AENT) and Pool (NASDAQ:POOL) are both consumer discretionary companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, risk, earnings, valuation, analyst recommendations, dividends and institutional ownership.

Earnings and Valuation

This table compares Alliance Entertainment and Pool”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Alliance Entertainment	$1.06 billion	0.27	$15.08 million	$0.44	12.86
Pool	$5.29 billion	1.42	$406.40 million	$10.87	18.98

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

Profitability

This table compares Alliance Entertainment and Pool’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Alliance Entertainment	2.01%	19.91%	5.71%
Pool	7.40%	32.74%	10.91%

Risk & Volatility

Alliance Entertainment has a beta of 0.43, indicating that its stock price is 57% less volatile than the S&P 500. Comparatively, Pool has a beta of 1.06, indicating that its stock price is 6% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations and price targets for Alliance Entertainment and Pool, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Alliance Entertainment	0	2	1	0	2.33
Pool	2	6	5	0	2.23

Alliance Entertainment currently has a consensus target price of $10.00, suggesting a potential upside of 76.68%. Pool has a consensus target price of $235.67, suggesting a potential upside of 14.23%. Given Alliance Entertainment’s stronger consensus rating and higher possible upside, equities analysts plainly believe Alliance Entertainment is more favorable than Pool.

Insider and Institutional Ownership

0.3% of Alliance Entertainment shares are held by institutional investors. Comparatively, 99.0% of Pool shares are held by institutional investors. 77.5% of Alliance Entertainment shares are held by company insiders. Comparatively, 3.0% of Pool shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

Pool beats Alliance Entertainment on 11 of the 14 factors compared between the two stocks.

About Alliance Entertainment

Alliance Entertainment Holding Corporation operates as a wholesaler, distributor, and e-commerce provider for the entertainment industry worldwide. It offers vinyl records, video games, digital video discs, blu-rays, toys, compact discs, collectibles, and other entertainment and consumer products. The company also provides third party logistics products and services. It distributes its physical media, entertainment products, hardware, and accessories through multi-channel strategy. The company was founded in 1990 and is headquartered in Plantation, Florida.

About Pool

Pool Corporation distributes swimming pool supplies, equipment, and related leisure products in the United States and internationally. The company offers maintenance products, including chemicals, supplies, and pool accessories; repair and replacement parts for pool equipment, such as cleaners, filters, heaters, pumps, and lights; and building materials, such as concrete, plumbing and electrical components, functional and decorative pool surfaces, decking materials, tiles, hardscapes, and natural stones for pool installations and remodeling. It also provides pool equipment and components for new pool construction and the remodeling of existing pools; irrigation and related products, such as irrigation system components, and professional turf care equipment and supplies; commercial products, including heaters, safety equipment, commercial decking equipment, and commercial pumps and filters. In addition, the company offers fiberglass pools, and hot tubs and packaged pool kits comprising walls, liners, braces, and coping for in-ground and above-ground pools; and other pool construction and recreational products comprising discretionary recreational and related outdoor living products, such as grills and components for outdoor kitchens. It serves swimming pool remodelers and builders; specialty retailers that sell swimming pool supplies; swimming pool repair and service businesses; irrigation construction and landscape maintenance contractors; and commercial pool operators and pool contractors. Pool Corporation was incorporated in 1993 and is headquartered in Covington, Louisiana.