AutoZone (NYSE: AZO) and AutoNation (NYSE:AN) are both mid-cap retail/wholesale companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, institutional ownership, analyst recommendations, risk, valuation, dividends and profitability.
Volatility and Risk
AutoZone has a beta of 0.61, meaning that its share price is 39% less volatile than the S&P 500. Comparatively, AutoNation has a beta of 1.24, meaning that its share price is 24% more volatile than the S&P 500.
Earnings and Valuation
This table compares AutoZone and AutoNation’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|AutoZone||$10.77 billion||1.39||$2.39 billion||$43.18||12.37|
|AutoNation||$21.47 billion||0.19||$916.20 million||$4.02||10.21|
AutoZone has higher revenue, but lower earnings than AutoNation. AutoNation is trading at a lower price-to-earnings ratio than AutoZone, indicating that it is currently the more affordable of the two stocks.
Insider & Institutional Ownership
97.1% of AutoZone shares are owned by institutional investors. Comparatively, 66.0% of AutoNation shares are owned by institutional investors. 2.6% of AutoZone shares are owned by company insiders. Comparatively, 3.1% of AutoNation shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.
This is a breakdown of recent ratings for AutoZone and AutoNation, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
AutoZone presently has a consensus price target of $763.05, suggesting a potential upside of 42.91%. AutoNation has a consensus price target of $46.56, suggesting a potential upside of 13.44%. Given AutoZone’s stronger consensus rating and higher possible upside, analysts clearly believe AutoZone is more favorable than AutoNation.
This table compares AutoZone and AutoNation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
AutoZone beats AutoNation on 10 of the 14 factors compared between the two stocks.
Autozone, Inc. is a retailer and distributor of automotive replacement parts and accessories in the United States. The Company operates through the Auto Parts Locations segment. The Auto Parts Locations segment is a retailer and distributor of automotive parts and accessories. As of August 27, 2016, the Company operated through 5,814 locations in the United States, Puerto Rico, Mexico and Brazil. The Company’s stores carry product lines for cars, sport utility vehicles, vans and light trucks, including new and remanufactured automotive hard parts, maintenance items, accessories and non-automotive products. The Company’s other operating segments include ALLDATA, which produces, sells and maintains diagnostic and repair information software used in the automotive repair industry; E-commerce, which includes direct sales to customers through www.autozone.com, and AutoAnything, which includes direct sales to customers through www.autoanything.com.
AutoNation, Inc. (AutoNation) is an automotive retailer in the United States. The Company offers a range of automotive products and services, including new vehicles, used vehicles, parts and service, which includes automotive repair and maintenance services, as well as wholesale parts and collision businesses, and automotive finance and insurance products, including vehicle service and other protection products, as well as the arranging of financing for vehicle purchases through third-party finance sources. It operates through three segments: Domestic, Import and Premium Luxury. Its Domestic segment consists of retail automotive franchises that sell new vehicles manufactured by General Motors, Ford and FCA US. The Import segment consists of retail automotive franchises that sell new vehicles manufactured primarily by Toyota, Honda and Nissan. The Premium Luxury segment consists of retail automotive franchises that sell new vehicles manufactured by Mercedes-Benz, BMW, Audi and Lexus.
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