Travelzoo (NASDAQ:TZOO) & Cars.com (NYSE:CARS) Critical Survey

Travelzoo (NASDAQ:TZOO) and Cars.com (NYSE:CARS) are both small-cap retail/wholesale companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, valuation, profitability, analyst recommendations, dividends, institutional ownership and risk.

Volatility and Risk

Travelzoo has a beta of 0.93, suggesting that its stock price is 7% less volatile than the S&P 500. Comparatively, Cars.com has a beta of 1.76, suggesting that its stock price is 76% more volatile than the S&P 500.

Institutional and Insider Ownership

27.4% of Travelzoo shares are owned by institutional investors. Comparatively, 89.2% of Cars.com shares are owned by institutional investors. 43.2% of Travelzoo shares are owned by company insiders. Comparatively, 2.4% of Cars.com shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Travelzoo and Cars.com, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Travelzoo	0	2	3	0	2.60
Cars.com	0	3	4	0	2.57

Travelzoo presently has a consensus price target of $19.50, suggesting a potential upside of 131.59%. Cars.com has a consensus price target of $17.90, suggesting a potential upside of 65.97%. Given Travelzoo’s stronger consensus rating and higher probable upside, equities analysts plainly believe Travelzoo is more favorable than Cars.com.

Valuation and Earnings

This table compares Travelzoo and Cars.com”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Travelzoo	$89.92 million	1.03	$13.56 million	$0.64	13.16
Cars.com	$717.85 million	0.92	$48.19 million	$0.62	17.40

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

Profitability

This table compares Travelzoo and Cars.com’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Travelzoo	8.66%	2,072.58%	15.50%
Cars.com	5.71%	17.43%	7.91%

Summary

Travelzoo beats Cars.com on 8 of the 14 factors compared between the two stocks.

About Travelzoo

Travelzoo, together with its subsidiaries, operates as an Internet media company that provides travel, entertainment, and local experiences worldwide. It operates in four segments: Travelzoo North America, Travelzoo Europe, Jack's Flight Club, and New Initiatives. The company offers Travelzoo website, Travelzoo Top 20 email newsletters, Standalone email newsletters, Travelzoo Network, Travelzoo mobile applications, Jack's Flight Club website, Jack's Flight Club mobile applications, and Jack's Flight Club newsletters. The company's Travelzoo website and newsletters include local deals and getaways listings that allow members to purchase vouchers for offers from local businesses, such as spas, hotels, and restaurants; Jack's Flight Club, a subscription service that provides members with information about exceptional airfares; and Travelzoo Network, a network of third-party websites that list travel deals published by the company. It serves airlines, hotels, cruise lines, vacations packagers, tour operators, destinations, car rental companies, travel agents, theater and performing arts groups, restaurants, spas, and activity companies. Travelzoo Inc. was incorporated in 1998 and is headquartered in New York, New York.

About Cars.com

Cars.com Inc., through its subsidiaries, operates as a digital automotive marketplace that connects local car dealers to consumers in the United States. The company offers a suite of digital solutions that creates connections between individuals researching cars or looking to purchase a car with car dealerships and automotive original equipment manufacturers. It also sells online subscription advertising products to car dealerships by its direct sales force, as well as through its affiliate sales channel. In addition, the company sells display advertising to national advertisers. Further, it offers online automotive marketplace service that connects buyers and sellers through Cars.com, Auto.com, DealerRater.com, NewCars.com, PickupTrucks.com, DealerInspire.com, and LaunchDigitalMarketing.com Websites. Its platform hosts approximately 4.9 million new and used vehicle listings and serves approximately 20,000 franchise and independent car dealers. Cars.com Inc. was founded in 1998 and is headquartered in Chicago, Illinois.