Contrasting Penske Automotive Group (NYSE:PAG) & Academy Sports and Outdoors (NASDAQ:ASO)

Academy Sports and Outdoors (NASDAQ:ASO) and Penske Automotive Group (NYSE:PAG) are both consumer discretionary companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, profitability, earnings, risk, analyst recommendations, institutional ownership and dividends.

Dividends

Academy Sports and Outdoors pays an annual dividend of $0.60 per share and has a dividend yield of 1.2%. Penske Automotive Group pays an annual dividend of $5.76 per share and has a dividend yield of 2.7%. Academy Sports and Outdoors pays out 10.0% of its earnings in the form of a dividend. Penske Automotive Group pays out 42.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Academy Sports and Outdoors has increased its dividend for 3 consecutive years and Penske Automotive Group has increased its dividend for 6 consecutive years. Penske Automotive Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

77.1% of Penske Automotive Group shares are held by institutional investors. 4.1% of Academy Sports and Outdoors shares are held by insiders. Comparatively, 52.9% of Penske Automotive Group shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Academy Sports and Outdoors	6.39%	18.36%	7.29%
Penske Automotive Group	2.81%	14.78%	4.72%

Analyst Recommendations

This is a breakdown of current ratings and price targets for Academy Sports and Outdoors and Penske Automotive Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Academy Sports and Outdoors	0	9	6	1	2.50
Penske Automotive Group	0	5	5	0	2.50

Academy Sports and Outdoors currently has a consensus price target of $58.29, indicating a potential upside of 20.70%. Penske Automotive Group has a consensus price target of $211.14, indicating a potential downside of 0.55%. Given Academy Sports and Outdoors’ higher possible upside, equities research analysts plainly believe Academy Sports and Outdoors is more favorable than Penske Automotive Group.

Volatility and Risk

Academy Sports and Outdoors has a beta of 1.02, meaning that its stock price is 2% more volatile than the S&P 500. Comparatively, Penske Automotive Group has a beta of 0.84, meaning that its stock price is 16% less volatile than the S&P 500.

Earnings & Valuation

This table compares Academy Sports and Outdoors and Penske Automotive Group”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Academy Sports and Outdoors	$6.05 billion	0.49	$376.77 million	$6.00	8.05
Penske Automotive Group	$31.81 billion	0.44	$935.40 million	$13.58	15.63

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

Summary

Academy Sports and Outdoors beats Penske Automotive Group on 9 of the 17 factors compared between the two stocks.

About Academy Sports and Outdoors

Academy Sports and Outdoors, Inc., through its subsidiaries, operates as a sporting goods and outdoor recreational retailer in the United States. The company outdoor division comprises camping products, such as coolers and drinkware, and camping accessories and equipment,; fishing products, including marine equipment and fishing rods, reels, and baits and equipment; and hunting products, which includes firearms, ammunition, archery and archery equipment, camouflage apparel, waders, shooting accessories, gun safes, optics, airguns, and hunting equipment. Its sports and recreation division offers fitness equipment, fitness accessories, and nutrition supplies; team and specialty sports equipment, including baseball, football, basketball, soccer, golf, racket sports, volleyball, backpacks, and sports bags; recreation products, which includes patio furniture, outdoor cooking, trampolines, play sets, watersports, and pet equipment, as well as wheeled goods including bicycles, skateboards, and other ride-on toys; and electronics and watches, as well as front-end products, such as consumables, batteries, etc. The company's apparel division provides outdoor and seasonal apparel, denim, work apparel, graphic t-shirts, and accessories; boys and girls outdoor, and athletic apparel; sporting and fitness apparel; and professional and collegiate team licensed apparel and accessories. Its footwear division offers casual shoes, slippers, seasonal footwear, and socks; work and western boots, shoes, and hunting footwear; boys and girls footwear; athletic footwear, such as running shoes, athletic lifestyle, and training shoes; and team and specialty sports footwear, and slides. The company sells its products under the Academy Sports + Outdoors, Magellan Outdoors, BCG, O'rageous, Game Winner, Outdoor Gourmet, and Freely brand names. Academy Sports and Outdoors, Inc. was founded in 1938 and is headquartered in Katy, Texas.

About Penske Automotive Group

Penske Automotive Group, Inc., a diversified transportation services company, operates automotive and commercial truck dealerships worldwide. The company operates through four segments: Retail Automotive, Retail Commercial Truck, Other, and Non-Automotive Investments. It operates dealerships under franchise agreements with various automotive manufacturers and distributors. The company is also involved in the sale of new and used motor vehicles, maintenance and repair services, sale and placement of third-party finance and insurance products, third-party extended service and maintenance contracts, replacement and aftermarket automotive products, collision repair services, and wholesale of parts. In addition, it operates a heavy and medium duty truck dealership, which offers Freightliner and Western Star branded trucks, as well as offers a range of used trucks. Further, it imports and distributes Western Star heavy-duty trucks, MAN heavy and medium duty trucks and buses, and Dennis Eagle refuse collection vehicles with associated parts. Additionally, the company distributes diesel and gas engines, and power systems. Penske Automotive Group, Inc. was incorporated in 1990 and is headquartered in Bloomfield Hills, Michigan.