Critical Analysis: Sonic Automotive (NYSE:SAH) and Lazydays (NASDAQ:GORV)

Sonic Automotive (NYSE:SAH) and Lazydays (NASDAQ:GORV) are both retail/wholesale companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, earnings, dividends, risk, institutional ownership, profitability and valuation.

Volatility and Risk

Sonic Automotive has a beta of 1.62, indicating that its stock price is 62% more volatile than the S&P 500. Comparatively, Lazydays has a beta of 2.02, indicating that its stock price is 102% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Sonic Automotive	1.21%	27.46%	4.64%
Lazydays	-12.48%	-16.47%	-3.86%

Earnings and Valuation

This table compares Sonic Automotive and Lazydays’ top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sonic Automotive	$14.37 billion	0.14	$178.20 million	$4.88	12.20
Lazydays	$1.08 billion	0.04	-$110.27 million	($9.62)	-0.31

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

Institutional and Insider Ownership

46.9% of Sonic Automotive shares are owned by institutional investors. Comparatively, 89.7% of Lazydays shares are owned by institutional investors. 41.0% of Sonic Automotive shares are owned by company insiders. Comparatively, 61.5% of Lazydays shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Sonic Automotive and Lazydays, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sonic Automotive	1	1	2	0	2.25
Lazydays	0	0	0	0	N/A

Sonic Automotive presently has a consensus target price of $56.75, indicating a potential downside of 4.65%. Given Sonic Automotive’s higher possible upside, analysts plainly believe Sonic Automotive is more favorable than Lazydays.

Summary

Sonic Automotive beats Lazydays on 10 of the 13 factors compared between the two stocks.

About Sonic Automotive

Sonic Automotive, Inc. operates as an automotive retailer in the United States. It operates in three segments, Franchised Dealerships, EchoPark, and Powersports. The Franchised Dealerships segment is involved in the sale of new and used cars and light trucks, and replacement parts; provision of vehicle maintenance, manufacturer warranty repair, and paint and collision repair services; and arrangement of extended warranties, service contracts, financing, insurance, and other aftermarket products for its guests. The EchoPark segment sells used cars and light trucks; and arranges finance and insurance product sales for its guests in pre-owned vehicle specialty retail locations. The Powersports Segment sells new and used powersports vehicles, such as motorcycles, and personal watercraft and all-terrain vehicles; and offers finance and insurance services. The company was incorporated in 1997 and is based in Charlotte, North Carolina.

About Lazydays

Lazydays Holdings, Inc. operates recreational vehicle (RV) dealerships under the Lazydays name in the United States. The company offers RV sales, RV-repair and services, financing and insurance products, third-party protection plans, and after-market parts and accessories. It also operates the Lazydays RV resort at Tampa, Florida. The company was founded in 1976 and is based in Tampa, Florida.