Head to Head Analysis: Lowe’s Companies (NYSE:LOW) versus AutoZone (NYSE:AZO)

AutoZone (NYSE:AZO) and Lowe’s Companies (NYSE:LOW) are both large-cap consumer discretionary companies, but which is the better business? We will compare the two companies based on the strength of their profitability, risk, institutional ownership, earnings, valuation, dividends and analyst recommendations.

Analyst Ratings

This is a breakdown of recent ratings and target prices for AutoZone and Lowe’s Companies, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AutoZone	0	6	20	1	2.81
Lowe’s Companies	2	11	23	0	2.58

AutoZone currently has a consensus price target of $3,913.62, indicating a potential upside of 36.86%. Lowe’s Companies has a consensus price target of $257.63, indicating a potential upside of 33.88%. Given AutoZone’s stronger consensus rating and higher probable upside, equities research analysts plainly believe AutoZone is more favorable than Lowe’s Companies.

Institutional and Insider Ownership

92.7% of AutoZone shares are owned by institutional investors. Comparatively, 74.1% of Lowe’s Companies shares are owned by institutional investors. 2.6% of AutoZone shares are owned by company insiders. Comparatively, 0.3% of Lowe’s Companies shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Volatility and Risk

AutoZone has a beta of 0.34, suggesting that its stock price is 66% less volatile than the S&P 500. Comparatively, Lowe’s Companies has a beta of 0.85, suggesting that its stock price is 15% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
AutoZone	12.40%	-80.35%	12.33%
Lowe’s Companies	7.34%	-75.67%	12.82%

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AutoZone	$18.94 billion	2.47	$2.50 billion	$145.45	19.66
Lowe’s Companies	$86.29 billion	1.25	$6.65 billion	$11.83	16.27

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

Summary

AutoZone beats Lowe’s Companies on 9 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 Lowe’s Companies

Lowe’s Companies, Inc., together with its subsidiaries, operates as a home improvement retailer in the United States. The company offers a line of products for construction, maintenance, repair, remodeling, and decorating. It also provides home improvement products, such as appliances, seasonal and outdoor living, lawn and garden, lumber, kitchens and bath, tools, paint, millwork, hardware, flooring, rough plumbing, building materials, décor, and electrical. In addition, the company offers installation services through independent contractors in various product categories; and extended protection plans and repair services. It sells its national brand-name merchandise and private brand products to professional customers, homeowners, renters, businesses, and government. The company also sells its products through Lowes.com website; and through mobile applications. Lowe’s Companies, Inc. was founded in 1921 and is based in Mooresville, North Carolina.