AutoNation vs Carvana Which Is More Lucrative?

AutoNation (AN) and Carvana (CVNA) are two prominent players in the automotive retail industry, each with their own unique business models and strategies. AutoNation, established in 1996, is a traditional dealership network with over 300 locations across the United States, offering both new and used vehicles. In contrast, Carvana, founded in 2012, is an online-only retailer featuring a wide selection of used cars and a streamlined purchasing process. Both companies have seen significant growth in recent years, attracting investors seeking exposure to the automotive sector.

AutoNation or Carvana?

When comparing AutoNation and Carvana, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between AutoNation and Carvana.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. AutoNation has a dividend yield of -%, while Carvana has a dividend yield of -%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. AutoNation reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%. On the other hand, Carvana reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with AutoNation P/E ratio at 9.54 and Carvana's P/E ratio at 1809.06. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. AutoNation P/B ratio is 2.91 while Carvana's P/B ratio is 50.33.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, AutoNation has seen a 5-year revenue growth of 1.57%, while Carvana's is 0.51%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with AutoNation's ROE at 31.66% and Carvana's ROE at 4.07%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $171.12 for AutoNation and $243.49 for Carvana. Over the past year, AutoNation's prices ranged from $133.13 to $197.18, with a yearly change of 48.11%. Carvana's prices fluctuated between $40.21 and $268.34, with a yearly change of 567.36%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.