Monro Muffler Brake (NASDAQ: MNRO) and AutoZone (NYSE:AZO) are both consumer discretionary companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, profitabiliy, risk, analyst recommendations, valuation, institutional ownership and dividends.

Dividends

Monro Muffler Brake pays an annual dividend of $0.72 per share and has a dividend yield of 1.5%. AutoZone does not pay a dividend. Monro Muffler Brake pays out 38.3% of its earnings in the form of a dividend. AutoZone has increased its dividend for 8 consecutive years.

Institutional & Insider Ownership

96.8% of AutoZone shares are held by institutional investors. 7.7% of Monro Muffler Brake shares are held by company insiders. Comparatively, 2.6% of AutoZone shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings for Monro Muffler Brake and AutoZone, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Monro Muffler Brake 0 4 4 0 2.50
AutoZone 1 12 10 0 2.39

Monro Muffler Brake presently has a consensus price target of $63.33, indicating a potential upside of 30.99%. AutoZone has a consensus price target of $763.05, indicating a potential upside of 49.19%. Given AutoZone’s higher possible upside, analysts clearly believe AutoZone is more favorable than Monro Muffler Brake.

Volatility and Risk

Monro Muffler Brake has a beta of 0.69, meaning that its share price is 31% less volatile than the S&P 500. Comparatively, AutoZone has a beta of 0.62, meaning that its share price is 38% less volatile than the S&P 500.

Earnings & Valuation

This table compares Monro Muffler Brake and AutoZone’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Monro Muffler Brake $1.02 billion 1.55 $162.01 million $1.88 25.72
AutoZone $10.77 billion 1.33 $2.39 billion $43.18 11.84

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

Profitability

This table compares Monro Muffler Brake and AutoZone’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Monro Muffler Brake 5.84% 10.90% 5.37%
AutoZone 11.82% -70.52% 14.44%

Summary

AutoZone beats Monro Muffler Brake on 10 of the 17 factors compared between the two stocks.

About Monro Muffler Brake

Monro Muffler Brake, Inc. is engaged in the provision of automotive undercar repair and tire services in the United States. The Company provides a range of services on passenger cars, light trucks and vans for brakes; mufflers and exhaust systems, and steering, drive train, suspension and wheel alignment. It also offers tires and routine maintenance services, which include state inspections. It offers repair and replacement of parts. Its store provides a range of undercar repair services for brakes, steering, mufflers and exhaust systems, suspension and wheel alignment, as well as tire replacement and service. It also offers scheduled maintenance services in its stores where services are packaged and offered to consumers based upon the year, make, model and mileage of each specific vehicle. Its maintenance services include oil change services, heating and cooling system flush and fill service, belt installation, fuel system service and a transmission flush and fill service.

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.

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