AutoZone (NYSE:AZO) and RH (NYSE:RH) Financial Review

RH (NYSE:RH) 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, analyst recommendations, profitability, dividends, valuation, institutional ownership and earnings.

Insider and Institutional Ownership

90.2% of RH shares are held by institutional investors. Comparatively, 92.7% of AutoZone shares are held by institutional investors. 26.9% of RH shares are held by company insiders. Comparatively, 1.8% of AutoZone shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares RH and AutoZone’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
RH	3.23%	132.79%	1.63%
AutoZone	12.65%	-90.08%	12.45%

Valuation & Earnings

This table compares RH and AutoZone”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
RH	$3.44 billion	0.74	$124.79 million	$5.62	23.88
AutoZone	$20.34 billion	2.53	$2.57 billion	$152.79	20.94

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

Analyst Recommendations

This is a summary of recent recommendations and price targets for RH and AutoZone, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
RH	3	9	7	0	2.21
AutoZone	0	6	19	2	2.85

RH presently has a consensus target price of $163.79, indicating a potential upside of 22.05%. AutoZone has a consensus target price of $3,674.36, indicating a potential upside of 14.84%. Given RH’s higher probable upside, analysts clearly believe RH is more favorable than AutoZone.

Risk & Volatility

RH has a beta of 1.92, indicating that its share price is 92% more volatile than the S&P 500. Comparatively, AutoZone has a beta of 0.37, indicating that its share price is 63% less volatile than the S&P 500.

Summary

AutoZone beats RH on 10 of the 15 factors compared between the two stocks.

About RH

RH, together with its subsidiaries, operates as a retailer in the home furnishings market. The company offers products in various categories, including furniture, lighting, textiles, bathware, décor, outdoor and garden, baby, child, and teen furnishings. It provides its products through rh.com, rhbabyandchild.com, rhteen.com, rhmodern.com, and waterworks.com online channels, as well as operates RH Galleries, RH outlet stores, RH Guesthouse, and Waterworks showrooms in the United States, Canada, the United Kingdom, and Germany. The company was formerly known as Restoration Hardware Holdings, Inc. and changed its name to RH in January 2017. RH was incorporated in 2011 and is headquartered in Corte Madera, California.

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.