Asbury Automotive Group (NYSE: ABG) and AutoZone (NYSE:AZO) are both retail/wholesale companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, risk, profitabiliy, earnings, institutional ownership and dividends.

Volatility and Risk

Asbury Automotive Group has a beta of 1.42, suggesting that its share price is 42% more volatile than the S&P 500. Comparatively, AutoZone has a beta of 0.61, suggesting that its share price is 39% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and price targets for Asbury Automotive Group and AutoZone, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Asbury Automotive Group 1 4 0 0 1.80
AutoZone 1 12 10 0 2.39

Asbury Automotive Group currently has a consensus price target of $56.75, indicating a potential upside of 4.70%. AutoZone has a consensus price target of $763.05, indicating a potential upside of 40.87%. Given AutoZone’s stronger consensus rating and higher probable upside, analysts clearly believe AutoZone is more favorable than Asbury Automotive Group.

Valuation and Earnings

This table compares Asbury Automotive Group and AutoZone’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Asbury Automotive Group $6.53 billion 0.17 $326.10 million $7.68 7.06
AutoZone $10.77 billion 1.41 $2.39 billion $43.18 12.54

AutoZone has higher revenue and earnings than Asbury Automotive Group. Asbury 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.

Profitability

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

Net Margins Return on Equity Return on Assets
Asbury Automotive Group 2.53% 46.58% 5.69%
AutoZone 11.82% -70.52% 14.44%

Insider & Institutional Ownership

99.9% of Asbury Automotive Group shares are owned by institutional investors. Comparatively, 97.1% of AutoZone shares are owned by institutional investors. 11.9% of Asbury Automotive Group shares are owned by insiders. Comparatively, 2.6% of AutoZone shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

AutoZone beats Asbury Automotive Group on 10 of the 14 factors compared between the two stocks.

Asbury Automotive Group Company Profile

Asbury Automotive Group, Inc. is an automotive retailer in the United States. As of December 31, 2016, the Company owned and operated 93 new vehicle franchises, representing 28 brands of automobiles at 77 dealership locations, and 23 collision centers in the United States. In addition, as of December 31, 2016, it owned and operated two standalone used vehicle stores in Florida. Its stores offer automotive products and services, including new and used vehicles; parts and service, including vehicle repair and maintenance services, replacement parts, and collision repair services; and finance and insurance products, including arranging vehicle financing through third parties and aftermarket products, such as extended service contracts, guaranteed asset protection (GAP) insurance, prepaid maintenance, and credit life and disability insurance. Its new vehicle revenues include new vehicle sales and lease transactions arranged by dealerships with third-party financial institutions.

AutoZone Company Profile

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.

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