Tandy Leather Factory (NASDAQ:TLF – Get Free Report) and CarMax (NYSE:KMX – Get Free Report) are both consumer discretionary companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, earnings, valuation, analyst recommendations, institutional ownership, profitability and dividends.
Volatility and Risk
Tandy Leather Factory has a beta of 0.5, suggesting that its share price is 50% less volatile than the S&P 500. Comparatively, CarMax has a beta of 1.17, suggesting that its share price is 17% more volatile than the S&P 500.
Earnings and Valuation
This table compares Tandy Leather Factory and CarMax”s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Tandy Leather Factory | $77.21 million | 0.28 | $9.10 million | ($0.17) | -15.41 |
| CarMax | $25.88 billion | 0.34 | $247.29 million | $1.53 | 40.18 |
CarMax has higher revenue and earnings than Tandy Leather Factory. Tandy Leather Factory is trading at a lower price-to-earnings ratio than CarMax, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
56.4% of Tandy Leather Factory shares are owned by institutional investors. 36.2% of Tandy Leather Factory shares are owned by insiders. Comparatively, 1.0% of CarMax shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
Analyst Ratings
This is a summary of current recommendations and price targets for Tandy Leather Factory and CarMax, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Tandy Leather Factory | 1 | 0 | 0 | 0 | 1.00 |
| CarMax | 3 | 14 | 2 | 1 | 2.05 |
CarMax has a consensus target price of $51.00, indicating a potential downside of 17.03%. Given CarMax’s stronger consensus rating and higher probable upside, analysts clearly believe CarMax is more favorable than Tandy Leather Factory.
Profitability
This table compares Tandy Leather Factory and CarMax’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Tandy Leather Factory | -2.14% | -3.31% | -1.98% |
| CarMax | 0.84% | 6.64% | 1.53% |
Summary
CarMax beats Tandy Leather Factory on 13 of the 15 factors compared between the two stocks.
About Tandy Leather Factory
Tandy Leather Factory, Inc. engages in the distribution of leather and related products. It offers leather, leatherworking tools, buckles and adornments for belts, leather dyes and finishes, saddle and tack hardware, and do-it-yourself kits. It operates through North America and International geographical segments. The North America geographical segment consists of 115 stores, which offer a broad selection of products combined with leathercraft expertise in a one-stop shop. The International geographical segment comprises of similar to North America segment but generally located in light industrial areas. The company was founded by J. Wray Thompson, Sr. and Ronald C. Morgan in 1980 and is headquartered in Fort Worth, TX.
About CarMax
CarMax, Inc., through its subsidiaries, operates as a retailer of used vehicles and related products in the United States. It operates in two segments: CarMax Sales Operations and CarMax Auto Finance. The CarMax Sales Operations segment offers customers a range of makes and models of used vehicles, including domestic, imported, and luxury vehicles, as well as hybrid and electric vehicles; used vehicle auctions; extended protection plans to customers at the time of sale; and reconditioning and vehicle repair services. The CarMax Auto Finance segment provides financing alternatives for retail customers across a range of credit spectrum and arrangements with various financial institutions. The company was founded in 1993 and is based in Richmond, Virginia.
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