Critical Review: AutoZone (NYSE:AZO) & Academy Sports and Outdoors (NASDAQ:ASO)

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

Insider and Institutional Ownership

92.7% of AutoZone shares are owned by institutional investors. 4.1% of Academy Sports and Outdoors shares are owned by company insiders. Comparatively, 2.6% of AutoZone shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current ratings and target prices for Academy Sports and Outdoors and AutoZone, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Academy Sports and Outdoors	1	8	6	1	2.44
AutoZone	0	6	20	1	2.81

Academy Sports and Outdoors currently has a consensus price target of $58.29, suggesting a potential upside of 7.50%. AutoZone has a consensus price target of $3,957.38, suggesting a potential upside of 37.50%. Given AutoZone’s stronger consensus rating and higher possible upside, analysts clearly believe AutoZone is more favorable than Academy Sports and Outdoors.

Earnings and Valuation

This table compares Academy Sports and Outdoors and AutoZone”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Academy Sports and Outdoors	$6.05 billion	0.56	$376.77 million	$5.68	9.55
AutoZone	$18.94 billion	2.48	$2.50 billion	$145.45	19.79

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

Volatility & Risk

Academy Sports and Outdoors has a beta of 1.02, indicating that its stock price is 2% more volatile than the S&P 500. Comparatively, AutoZone has a beta of 0.34, indicating that its stock price is 66% less volatile than the S&P 500.

Profitability

This table compares Academy Sports and Outdoors and AutoZone’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%
AutoZone	12.40%	-80.35%	12.33%

Summary

AutoZone beats Academy Sports and Outdoors on 11 of the 14 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 AutoZone

AutoZone, Inc. retails and distributes automotive replacement parts and accessories in the United States, Mexico, and Brazil. The company provides 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. It also offers A/C compressors, batteries and accessories, bearings, belts and hoses, calipers, chassis, clutches, CV axles, engines, fuel pumps, fuses, ignition and lighting products, mufflers, radiators, starters and alternators, thermostats, and water pumps, as well as tire repairs. In addition, the company provides 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, cabin, air, fuel, and transmission filters; oxygen sensors; paints and accessories; refrigerants and accessories; shock absorbers and struts; spark plugs and wires; and windshield wipers. Further, it offers 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, tools, vehicle entertainment systems, and wash and wax products, as well as towing services. Additionally, the company provides a sales program that offers commercial credit and delivery of parts and other products; sells automotive diagnostic and repair software under the ALLDATA brand through alldata.com and alldatadiy.com; and automotive hard parts, maintenance items, accessories, and non-automotive products through autozone.com. AutoZone, Inc. was founded in 1979 and is headquartered in Memphis, Tennessee.