Analyzing AutoCanada (OTCMKTS:AOCIF) and AutoNation (NYSE:AN)

AutoCanada (OTCMKTS:AOCIF) and AutoNation (NYSE:AN) are both consumer cyclical companies, but which is the better stock? We will compare the two companies based on the strength of their analyst recommendations, profitability, institutional ownership, risk, valuation, earnings and dividends.

Institutional & Insider Ownership

44.8% of AutoCanada shares are owned by institutional investors. Comparatively, 97.2% of AutoNation shares are owned by institutional investors. 0.7% of AutoNation shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares AutoCanada and AutoNation’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AutoCanada	N/A	N/A	N/A
AutoNation	4.06%	54.72%	10.63%

Valuation & Earnings

This table compares AutoCanada and AutoNation’s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AutoCanada	N/A	N/A	N/A	$2.17	6.41
AutoNation	$26.99 billion	0.22	$1.38 billion	$23.35	5.85

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

Analyst Recommendations

This is a summary of current ratings for AutoCanada and AutoNation, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AutoCanada	0	1	0	0	2.00
AutoNation	1	2	2	0	2.20

AutoCanada currently has a consensus target price of $41.33, suggesting a potential upside of 197.15%. AutoNation has a consensus target price of $173.71, suggesting a potential upside of 27.17%. Given AutoCanada’s higher probable upside, equities analysts plainly believe AutoCanada is more favorable than AutoNation.

Summary

AutoNation beats AutoCanada on 9 of the 11 factors compared between the two stocks.

About AutoCanada

AutoCanada Inc., through its subsidiaries, operates franchised automobile dealerships. The company offers a range of automotive products and services, including new and used vehicles, vehicle leasing, vehicle parts, vehicle maintenance and collision repair services, extended service contracts, and vehicle protection, after-market products, and auction services. It also arranges financing and insurance for vehicle purchases by its customers through third-party finance and insurance sources. The company sells its vehicles under the Chrysler, Dodge, Jeep, Ram, FIAT, Alfa Romeo, Chevrolet, GMC, Buick, Cadillac, Ford, Infiniti, Nissan, Hyundai, Subaru, Audi, Volkswagen, Kia, Mazda, Mercedes-Benz, Acura, BMW, MINI, Volvo, Toyota, Lincoln, Porsche, and Honda brands. It operates franchised dealerships in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nova Scotia, and New Brunswick in Canada, as well as in Illinois, the United States. The company also offers used vehicles online. AutoCanada Inc. was incorporated in 2009 and is based in Edmonton, Canada.

About AutoNation

AutoNation, Inc., through its subsidiaries, operates as an automotive retailer in the United States. The company operates through three segments: Domestic, Import, and Premium Luxury. It offers a range of automotive products and services, including new and used vehicles; and parts and services, such as automotive repair and maintenance, and wholesale parts and collision services. The company also provides automotive finance and insurance products comprising vehicle services and other protection products, as well as arranges finance for vehicle purchases through third-party finance sources. It owns and operates 343 new vehicle franchises from 247 stores located primarily in metropolitan markets in the Sunbelt region, as well as 55 AutoNation-branded collision centers, 13 AutoNation USA used vehicle stores, 4 AutoNation-branded automotive auction operations, and 3 parts distribution centers. AutoNation, Inc. was incorporated in 1991 and is headquartered in Fort Lauderdale, Florida.