AutoZone (NYSE: AZO) and Penske Automotive Group (NYSE:PAG) are both mid-cap retail/wholesale companies, but which is the better investment? We will compare the two businesses based on the strength of their analyst recommendations, risk, dividends, profitabiliy, earnings, institutional ownership and valuation.

Dividends

Penske Automotive Group pays an annual dividend of $1.24 per share and has a dividend yield of 2.8%. AutoZone does not pay a dividend. Penske Automotive Group pays out 30.5% of its earnings in the form of a dividend. Penske Automotive Group has increased its dividend for 6 consecutive years.

Volatility & Risk

AutoZone has a beta of 0.62, suggesting that its stock price is 38% less volatile than the S&P 500. Comparatively, Penske Automotive Group has a beta of 1.49, suggesting that its stock price is 49% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings for AutoZone and Penske Automotive Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AutoZone 1 12 10 0 2.39
Penske Automotive Group 1 3 3 0 2.29

AutoZone currently has a consensus target price of $763.05, suggesting a potential upside of 49.32%. Penske Automotive Group has a consensus target price of $53.20, suggesting a potential upside of 21.82%. Given AutoZone’s stronger consensus rating and higher probable upside, analysts clearly believe AutoZone is more favorable than Penske Automotive Group.

Earnings & Valuation

This table compares AutoZone and Penske Automotive Group’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
AutoZone $10.77 billion 1.33 $2.39 billion $43.18 11.83
Penske Automotive Group $20.38 billion 0.18 $672.30 million $4.06 10.76

AutoZone has higher revenue, but lower earnings than Penske Automotive Group. Penske Automotive Group is trading at a lower price-to-earnings ratio than AutoZone, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

96.9% of AutoZone shares are owned by institutional investors. Comparatively, 39.1% of Penske Automotive Group shares are owned by institutional investors. 2.6% of AutoZone shares are owned by company insiders. Comparatively, 40.7% of Penske Automotive Group shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares AutoZone and Penske Automotive Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AutoZone 11.82% -70.52% 14.44%
Penske Automotive Group 1.70% 19.06% 3.93%

Summary

AutoZone beats Penske Automotive Group on 11 of the 17 factors compared between the two stocks.

About AutoZone

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.

About Penske Automotive Group

Penske Automotive Group, Inc. is an international transportation services company. The Company operates automotive and commercial truck dealerships principally in the United States, Canada and Western Europe, and distributes commercial vehicles, diesel engines, gas engines, power systems, and related parts and services principally in Australia and New Zealand. The Company’s segments include Retail Automotive, consisting of its retail automotive dealership operations; Retail Commercial Truck, consisting of its retail commercial truck dealership operations in the United States and Canada; Other, consisting of its commercial vehicle and power systems distribution operations and other non-automotive consolidated operations, and Non-Automotive Investments, consisting of its equity method investments in non-automotive operations. The Company holds interests in Penske Truck Leasing Co., L.P. (PTL), a provider of transportation services and supply chain management.

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