Lithia Motors (NYSE:LAD – Get Free Report) and ARKO (NASDAQ:ARKO – Get Free Report) are both consumer discretionary companies, but which is the superior investment? We will compare the two companies based on the strength of their analyst recommendations, profitability, risk, valuation, earnings, institutional ownership and dividends.
Analyst Recommendations
This is a summary of current ratings and recommmendations for Lithia Motors and ARKO, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Lithia Motors | 0 | 5 | 6 | 0 | 2.55 |
| ARKO | 1 | 1 | 1 | 0 | 2.00 |
Lithia Motors presently has a consensus price target of $436.33, suggesting a potential upside of 18.01%. ARKO has a consensus price target of $14.50, suggesting a potential upside of 210.49%. Given ARKO’s higher possible upside, analysts clearly believe ARKO is more favorable than Lithia Motors.
Volatility & Risk
Earnings & Valuation
This table compares Lithia Motors and ARKO”s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Lithia Motors | $37.63 billion | 0.22 | $819.60 million | $30.15 | 12.26 |
| ARKO | $7.64 billion | 0.07 | $22.74 million | $0.07 | 66.71 |
Lithia Motors has higher revenue and earnings than ARKO. Lithia Motors is trading at a lower price-to-earnings ratio than ARKO, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
78.3% of ARKO shares are owned by institutional investors. 1.1% of Lithia Motors shares are owned by insiders. Comparatively, 21.9% of ARKO shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Profitability
This table compares Lithia Motors and ARKO’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Lithia Motors | 1.88% | 12.16% | 3.14% |
| ARKO | 0.19% | 4.02% | 0.41% |
Dividends
Lithia Motors pays an annual dividend of $2.80 per share and has a dividend yield of 0.8%. ARKO pays an annual dividend of $0.12 per share and has a dividend yield of 2.6%. Lithia Motors pays out 9.3% of its earnings in the form of a dividend. ARKO pays out 171.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Lithia Motors has increased its dividend for 16 consecutive years.
Summary
Lithia Motors beats ARKO on 12 of the 17 factors compared between the two stocks.
About Lithia Motors
Lithia Motors, Inc. operates as an automotive retailer worldwide. It operates in two segments, Vehicle Operations and Financing Operations. The company’s Vehicle Operations segment sells new and used vehicles; provides parts, repair, and maintenance services; vehicle finance; and insurance products. Its Financing Operations segment provides financing to customers buying and leasing retail vehicles. The company sells its products and services through the Driveway and Greencars brand names through a network of locations, e-commerce platforms, and captive finance solutions. Lithia Motors, Inc. was founded in 1946 and is headquartered in Medford, Oregon.
About ARKO
Arko Corp. operates convenience stores in the United States. It operates through Retail, Wholesale, Fleet Fueling, and GPMP segments. The Retail segment engages in the sale of fuel and merchandise to retail consumers. Its Wholesale segment supplies fuel to third-party dealers and consignment agents. The Fleet Fueling segment supplies fuel to proprietary and third-party cardlock, and issuance of proprietary fuel cards. Its GPMP segment supplies fuel to retail and wholesale segments. The company is based in Richmond, Virginia.
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