AutoNation (NYSE: AN) and Monro Muffler Brake (NASDAQ:MNRO) are both retail/wholesale companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, risk, dividends, analyst recommendations, earnings and profitabiliy.

Analyst Recommendations

This is a breakdown of current ratings and price targets for AutoNation and Monro Muffler Brake, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AutoNation 0 9 3 0 2.25
Monro Muffler Brake 0 4 4 0 2.50

AutoNation currently has a consensus price target of $46.56, suggesting a potential upside of 17.27%. Monro Muffler Brake has a consensus price target of $63.33, suggesting a potential upside of 33.61%. Given Monro Muffler Brake’s stronger consensus rating and higher possible upside, analysts plainly believe Monro Muffler Brake is more favorable than AutoNation.

Profitability

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

Net Margins Return on Equity Return on Assets
AutoNation 1.90% 16.71% 3.95%
Monro Muffler Brake 6.31% 11.94% 5.93%

Insider & Institutional Ownership

66.2% of AutoNation shares are owned by institutional investors. 3.1% of AutoNation shares are owned by insiders. Comparatively, 6.2% of Monro Muffler Brake shares are owned by 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.

Earnings & Valuation

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
AutoNation $21.47 billion 0.18 $943.60 million $4.02 9.88
Monro Muffler Brake $1.06 billion 1.49 $164.81 million $1.88 25.21

AutoNation has higher revenue and earnings than Monro Muffler Brake. AutoNation 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.

Volatility and Risk

AutoNation has a beta of 1.24, suggesting that its stock price is 24% more volatile than the S&P 500. Comparatively, Monro Muffler Brake has a beta of 0.71, suggesting that its stock price is 29% less volatile than the S&P 500.

Dividends

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

Summary

Monro Muffler Brake beats AutoNation on 9 of the 17 factors compared between the two stocks.

About AutoNation

AutoNation, Inc. (AutoNation) is an automotive retailer in the United States. The Company offers a range of automotive products and services, including new vehicles, used vehicles, parts and service, which includes automotive repair and maintenance services, as well as wholesale parts and collision businesses, and automotive finance and insurance products, including vehicle service and other protection products, as well as the arranging of financing for vehicle purchases through third-party finance sources. It operates through three segments: Domestic, Import and Premium Luxury. Its Domestic segment consists of retail automotive franchises that sell new vehicles manufactured by General Motors, Ford and FCA US. The Import segment consists of retail automotive franchises that sell new vehicles manufactured primarily by Toyota, Honda and Nissan. The Premium Luxury segment consists of retail automotive franchises that sell new vehicles manufactured by Mercedes-Benz, BMW, Audi and Lexus.

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.

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