Analyzing Group 1 Automotive (NYSE:GPI) and Tilly’s (NYSE:TLYS)

Tilly’s (NYSE:TLYS) and Group 1 Automotive (NYSE:GPI) are both consumer discretionary companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, valuation, dividends, institutional ownership, risk, earnings and analyst recommendations.

Risk & Volatility

Tilly’s has a beta of 0.06, meaning that its stock price is 94% less volatile than the S&P 500. Comparatively, Group 1 Automotive has a beta of 0.92, meaning that its stock price is 8% less volatile than the S&P 500.

Insider and Institutional Ownership

76.4% of Tilly’s shares are owned by institutional investors. Comparatively, 99.9% of Group 1 Automotive shares are owned by institutional investors. 26.4% of Tilly’s shares are owned by insiders. Comparatively, 2.4% of Group 1 Automotive shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Tilly’s and Group 1 Automotive”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Tilly’s	$553.59 million	0.25	-$17.45 million	$0.06	75.95
Group 1 Automotive	$22.15 billion	0.12	$325.20 million	$24.01	9.52

Group 1 Automotive has higher revenue and earnings than Tilly’s. Group 1 Automotive is trading at a lower price-to-earnings ratio than Tilly’s, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Tilly’s and Group 1 Automotive’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Tilly’s	0.34%	2.37%	0.61%
Group 1 Automotive	1.31%	15.66%	4.43%

Analyst Recommendations

This is a summary of current ratings for Tilly’s and Group 1 Automotive, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tilly’s	0	3	0	0	2.00
Group 1 Automotive	3	2	5	0	2.20

Tilly’s presently has a consensus target price of $5.50, indicating a potential upside of 20.69%. Group 1 Automotive has a consensus target price of $341.67, indicating a potential upside of 49.47%. Given Group 1 Automotive’s stronger consensus rating and higher possible upside, analysts plainly believe Group 1 Automotive is more favorable than Tilly’s.

Summary

Group 1 Automotive beats Tilly’s on 11 of the 14 factors compared between the two stocks.

About Tilly’s

Tilly’s, Inc. engages in the retail of casual apparel, footwear, and accessories. Its stores are located in retail centers, including malls, lifestyle centers, power centers, community centers, outlet centers, and street-front locations. The company was founded by Hezy Shaked and Tilly Levine in 1982 and is headquartered in Irvine, CA.

About Group 1 Automotive

Group 1 Automotive, Inc., through its subsidiaries, operates in the automotive retail industry in the United States and the United Kingdom. The company sells new and used cars, light trucks, and vehicle parts, as well as service and insurance contracts; arranges related vehicle financing; and offers automotive maintenance and repair services. Group 1 Automotive, Inc. was incorporated in 1995 and is headquartered in Houston, Texas.