Driven Brands (NASDAQ:DRVN – Get Free Report) and Sally Beauty (NYSE:SBH – Get Free Report) are both small-cap consumer discretionary companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, earnings, analyst recommendations, valuation and dividends.
Risk & Volatility
Driven Brands has a beta of 0.94, meaning that its stock price is 6% less volatile than the S&P 500. Comparatively, Sally Beauty has a beta of 1.05, meaning that its stock price is 5% more volatile than the S&P 500.
Earnings and Valuation
This table compares Driven Brands and Sally Beauty”s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Driven Brands | $1.86 billion | 1.03 | $140.16 million | $1.04 | 11.18 |
| Sally Beauty | $3.70 billion | 0.42 | $195.88 million | $1.92 | 8.60 |
Sally Beauty has higher revenue and earnings than Driven Brands. Sally Beauty is trading at a lower price-to-earnings ratio than Driven Brands, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
77.1% of Driven Brands shares are held by institutional investors. 4.4% of Driven Brands shares are held by company insiders. Comparatively, 2.0% of Sally Beauty shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
Analyst Recommendations
This is a summary of current ratings for Driven Brands and Sally Beauty, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Driven Brands | 2 | 7 | 6 | 2 | 2.47 |
| Sally Beauty | 1 | 3 | 3 | 0 | 2.29 |
Driven Brands presently has a consensus price target of $16.23, indicating a potential upside of 39.61%. Sally Beauty has a consensus price target of $17.40, indicating a potential upside of 5.33%. Given Driven Brands’ stronger consensus rating and higher possible upside, equities research analysts clearly believe Driven Brands is more favorable than Sally Beauty.
Profitability
This table compares Driven Brands and Sally Beauty’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Driven Brands | 8.61% | 24.13% | 5.03% |
| Sally Beauty | 5.16% | 24.36% | 7.07% |
Summary
Driven Brands beats Sally Beauty on 9 of the 15 factors compared between the two stocks.
About Driven Brands
Driven Brands Holdings Inc., together with its subsidiaries, provides automotive services to retail and commercial customers in the United States, Canada, and internationally. It offers various services, such as paint, collision, glass, repair, car wash, oil change, and maintenance services. The company also distributes automotive parts, including radiators, air conditioning components, and exhaust products to automotive repair shops, auto parts stores, body shops, and other auto repair outlets; windshields and glass accessories through a network of distribution centers; and consumable products, such as oil filters and wiper blades, as well as training services to repair and maintenance, and paint and collision shops. It sells its products and services under the CARSTAR, IMO, MAACO, Meineke Car Care Centers, PH Vitres D’Autos, Take 5 Oil Change, Take 5 Car Wash, Auto Glass Now, Fix Auto USA, and 1-800-Radiator & A/C, Spire Supply, and Automotive Training Institute brands. The company was founded in 1972 and is headquartered in Charlotte, North Carolina.
About Sally Beauty
Sally Beauty Holdings, Inc. operates as a specialty retailer and distributor of professional beauty supplies. The company operates through two segments, Sally Beauty Supply and Beauty Systems Group. The Sally Beauty Supply segment offers beauty products, including hair color and care products, skin and nail care products, styling tools, and other beauty products for retail customers, salons, and salon professionals. This segment also provides products under Wella and L'Oreal brands. The Beauty Systems Group segment offers professional beauty products, such as hair color and care products, skin and nail care products, styling tools, and other beauty items directly to salons and salon professionals through its professional-only stores, e-commerce platforms, and sales force, as well as through franchised stores under the Armstrong McCall store name. This segment also sells products under Paul Mitchell and Wella brands. It operates stores and franchised units in the United States, Puerto Rico, Canada, Mexico, Chile, Peru, the United Kingdom, Ireland, Belgium, France, the Netherlands, Spain, and Germany. The company distributes its products through full-service/exclusive distributors and open-line distributors. Sally Beauty Holdings, Inc. was founded in 1964 and is headquartered in Denton, Texas.
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