Comparing AutoZone (AZO) & Advance Auto Parts (AAP)

AutoZone (NYSE: AZO) and Advance Auto Parts (NYSE:AAP) are both retail/wholesale companies, but which is the superior stock? We will compare the two businesses based on the strength of their valuation, profitability, institutional ownership, analyst recommendations, risk, earnings and dividends.

Profitability

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This table compares AutoZone and Advance Auto Parts’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AutoZone 12.00% -88.86% 14.37%
Advance Auto Parts 5.07% 12.45% 4.71%

Analyst Recommendations

This is a summary of recent ratings and recommmendations for AutoZone and Advance Auto Parts, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AutoZone 1 9 11 0 2.48
Advance Auto Parts 3 8 13 0 2.42

AutoZone currently has a consensus price target of $755.18, indicating a potential upside of 24.10%. Advance Auto Parts has a consensus price target of $112.19, indicating a potential upside of 4.47%. Given AutoZone’s stronger consensus rating and higher probable upside, research analysts clearly believe AutoZone is more favorable than Advance Auto Parts.

Valuation & Earnings

This table compares AutoZone and Advance Auto Parts’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
AutoZone $10.89 billion 1.52 $1.28 billion $43.04 14.14
Advance Auto Parts $9.37 billion 0.85 $475.50 million $5.37 20.00

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

Insider and Institutional Ownership

95.9% of AutoZone shares are held by institutional investors. 2.8% of AutoZone shares are held by insiders. Comparatively, 4.1% of Advance Auto Parts shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Dividends

Advance Auto Parts pays an annual dividend of $0.24 per share and has a dividend yield of 0.2%. AutoZone does not pay a dividend. Advance Auto Parts pays out 4.5% of its earnings in the form of a dividend.

Risk & Volatility

AutoZone has a beta of 0.84, suggesting that its share price is 16% less volatile than the S&P 500. Comparatively, Advance Auto Parts has a beta of 1.04, suggesting that its share price is 4% more volatile than the S&P 500.

Summary

AutoZone beats Advance Auto Parts on 10 of the 16 factors compared between the two stocks.

AutoZone Company Profile

AutoZone, Inc. retails and distributes automotive replacement parts and accessories. It offers various products 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 products include A/C compressors, batteries and accessories, bearings, belts and hoses, calipers, carburetors, chassis, clutches, CV axles, engines, fuel pumps, fuses, ignition and lighting products, mufflers, radiators, thermostats, starters and alternators, and water pumps. It also offers maintenance products, such as antifreeze and windshield washer fluids; brake drums, rotors, shoes, and pads; brake and power steering fluids, and oil and fuel additives; oil and transmission fluids; oil, air, fuel, and transmission filters; oxygen sensors; paints and accessories; refrigerants and accessories; shock absorbers and struts; spark plugs and wires; and windshield wipers, as well as air fresheners, cell phone accessories, drinks and snacks, floor mats and seat covers, interior and exterior accessories, mirrors, performance products, protectants and cleaners, sealants and adhesives, steering wheel covers, stereos and radios, tools, and wash and wax products. In addition, the company provides a sales program that offers commercial credit and delivery of parts and other products; and tire repair services. Further, it sells automotive diagnostic and repair software under the ALLDATA brand through alldata.com and alldatadiy.com; automotive hard parts, maintenance items, accessories, and non-automotive products through autozone.com; and accessories, performance, and replacement parts through autoanything.com. As of December 05, 2017, it operated 5,480 stores in the United States, including Puerto Rico; 529 stores in Mexico; 14 stores in Brazil; and 26 Interamerican Motor Corporation branches. AutoZone, Inc. was founded in 1979 and is based in Memphis, Tennessee.

Advance Auto Parts Company Profile

Advance Auto Parts, Inc. provides automotive aftermarket parts in North America, serving do-it-for-me (Professional) and do-it-yourself (DIY), customers. The Company’s stores and branches offer a selection of brand name, original equipment manufacturer (OEM) and private label automotive replacement parts, accessories, batteries and maintenance items for domestic and imported cars, vans, sport utility vehicles and light and heavy duty trucks. It serves through various channels ranging from traditional brick and mortar store locations to self-serving e-commerce sites. As of December 31, 2016, it operated 5,062 total stores and 127 branches primarily under the trade names Advance Auto Parts, Autopart International, Carquest and Worldpac. As of December 31, 2016, its Advance Auto Parts operations consisted of three geographic divisions, which included the operations of the stores operating under the Advance Auto Parts, Carquest and Autopart International trade names.

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