Comparing RH (NYSE:RH) & AutoZone (NYSE:AZO)

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

Institutional & Insider Ownership

92.7% of AutoZone shares are owned by institutional investors. Comparatively, 90.2% of RH shares are owned by institutional investors. 2.6% of AutoZone shares are owned by insiders. Comparatively, 26.9% of RH shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for AutoZone and RH, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AutoZone	0	6	18	2	2.85
RH	3	9	7	0	2.21

AutoZone presently has a consensus price target of $3,674.36, suggesting a potential upside of 14.19%. RH has a consensus price target of $163.00, suggesting a potential upside of 24.27%. Given RH’s higher probable upside, analysts plainly believe RH is more favorable than AutoZone.

Earnings & Valuation

This table compares AutoZone and RH”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AutoZone	$20.34 billion	2.55	$2.57 billion	$152.79	21.06
RH	$3.44 billion	0.72	$124.79 million	$5.62	23.34

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.

Risk and Volatility

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

Profitability

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

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

Summary

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

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.

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.