Critical Analysis: Vroom (NASDAQ:VRM) & Harley-Davidson (NYSE:HOG)

Vroom (NASDAQ:VRM) and Harley-Davidson (NYSE:HOG) are both auto/tires/trucks companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, dividends, analyst recommendations, profitability, valuation, risk and earnings.

Insider & Institutional Ownership

25.8% of Vroom shares are held by institutional investors. Comparatively, 85.1% of Harley-Davidson shares are held by institutional investors. 2.9% of Vroom shares are held by company insiders. Comparatively, 1.0% of Harley-Davidson shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Volatility & Risk

Vroom has a beta of 1.2, indicating that its share price is 20% more volatile than the S&P 500. Comparatively, Harley-Davidson has a beta of 1.26, indicating that its share price is 26% more volatile than the S&P 500.

Earnings and Valuation

This table compares Vroom and Harley-Davidson”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Vroom	$178.83 million	0.25	-$7.96 million	($12.76)	-0.67
Harley-Davidson	$4.47 billion	0.59	$338.74 million	$1.76	14.31

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

Profitability

This table compares Vroom and Harley-Davidson’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Vroom	-37.16%	-51.07%	-6.63%
Harley-Davidson	5.68%	7.03%	2.43%

Analyst Ratings

This is a breakdown of current ratings and target prices for Vroom and Harley-Davidson, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Vroom	1	0	0	0	1.00
Harley-Davidson	2	5	3	1	2.27

Harley-Davidson has a consensus target price of $24.22, suggesting a potential downside of 3.84%. Given Harley-Davidson’s stronger consensus rating and higher probable upside, analysts plainly believe Harley-Davidson is more favorable than Vroom.

Summary

Harley-Davidson beats Vroom on 14 of the 15 factors compared between the two stocks.

About Vroom

Vroom, Inc. operates as an automotive finance company. The company offers vehicle financing to its customers through third party dealers under the UACC brand. It also provides artificial intelligence powered analytics and digital services to dealers, automotive financial services companies, and others in the automotive industry for automotive retail. The company was formerly known as Auto America, Inc. and changed its name to Vroom, Inc. in July 2015. Vroom, Inc. was incorporated in 2012 and is based in Houston, Texas.

About Harley-Davidson

Harley-Davidson, Inc. manufactures and sells motorcycles in the United States and internationally. The company operates in three segments: Harley-Davidson Motor Company, LiveWire, and Harley-Davidson Financial Services. The Harley-Davidson Motor Company segment designs, manufactures, and sells motorcycles, including cruiser, trike, touring, standard, sportbike, adventure, and dual sport, as well as motorcycle parts, accessories, and apparel, as well as licenses its trademarks and related services. This segment sells its products to retail customers through a network of independent dealers, as well as e-commerce channels. The LiveWire segment sells electric motorcycles, balance bikes for kids, parts and accessories, apparel, and related parts and services. The Harley-Davidson Financial Services segment provides wholesale financing services, such as floorplan and open account financing of motorcycles, and parts and accessories; and retail financing services, such as installment lending for the purchase of new and used Harley-Davidson motorcycles, as well as point-of-sale insurance and voluntary protection products. This segment also licenses third-party financial institutions that issue credit cards bearing the Harley-Davidson brand. Harley-Davidson, Inc. was founded in 1903 and is based in Milwaukee, Wisconsin.