Comparing ARKO (NASDAQ:ARKO) and Carvana (NYSE:CVNA)

Carvana (NYSE:CVNA) and ARKO (NASDAQ:ARKO) are both consumer discretionary companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, profitability, earnings, risk, dividends, valuation and analyst recommendations.

Earnings and Valuation

This table compares Carvana and ARKO”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Carvana	$20.32 billion	3.18	$1.41 billion	$1.81	32.44
ARKO	$7.64 billion	0.06	$22.74 million	$0.07	57.64

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

Institutional and Insider Ownership

56.7% of Carvana shares are held by institutional investors. Comparatively, 78.3% of ARKO shares are held by institutional investors. 15.2% of Carvana shares are held by company insiders. Comparatively, 21.9% of ARKO shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Volatility and Risk

Carvana has a beta of 3.55, suggesting that its stock price is 255% more volatile than the S&P 500. Comparatively, ARKO has a beta of 0.93, suggesting that its stock price is 7% less volatile than the S&P 500.

Profitability

This table compares Carvana and ARKO’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Carvana	6.26%	37.06%	12.21%
ARKO	0.19%	4.02%	0.41%

Analyst Ratings

This is a breakdown of current recommendations and price targets for Carvana and ARKO, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Carvana	0	8	16	1	2.72
ARKO	1	1	1	0	2.00

Carvana currently has a consensus price target of $83.04, indicating a potential upside of 41.43%. ARKO has a consensus price target of $14.50, indicating a potential upside of 259.36%. Given ARKO’s higher possible upside, analysts clearly believe ARKO is more favorable than Carvana.

Summary

Carvana beats ARKO on 11 of the 15 factors compared between the two stocks.

About Carvana

Carvana Co., together with its subsidiaries, operates an e-commerce platform for buying and selling used cars in the United States. Its platform allows customers to research and identify a vehicle; inspect it using company's 360-degree vehicle imaging technology; obtain financing and warranty coverage; purchase the vehicle; and schedule delivery or pick-up from their desktop or mobile devices. The company also operates auction sites. The company was founded in 2012 and is based in Tempe, Arizona.

About ARKO

Arko Corp. operates convenience stores in the United States. It operates through Retail, Wholesale, Fleet Fueling, and GPMP segments. The Retail segment engages in the sale of fuel and merchandise to retail consumers. Its Wholesale segment supplies fuel to third-party dealers and consignment agents. The Fleet Fueling segment supplies fuel to proprietary and third-party cardlock, and issuance of proprietary fuel cards. Its GPMP segment supplies fuel to retail and wholesale segments. The company is based in Richmond, Virginia.