| Stock | Price | 52 Week Range | Marketcap | EPS | Dividend Yield | Chart (24H) | Sector | Employees | Last Updated |
|---|---|---|---|---|---|---|---|---|---|
| $3,242.23 | 54.41B | 149.47 | 0.00% | Consumer Cyclical | 71,400 | 5 hours ago | |||
| $1,207.26 | 69.70B | 40.44 | 0.00% | Consumer Cyclical | 90,601 | 5 hours ago | |||
| $43.75 | 2.61B | 0.79 | 2.43% | Consumer Cyclical | 40,000 | 5 hours ago | |||
 Walmart Inc. WMT | $90.35 | 725.82B | 2.42 | 0.99% | Consumer Defensive | 2,100,000 | 5 hours ago | ||
| $131.92 | 60.45B | 9.43 | 2.87% | Consumer Defensive | 415,000 | 5 hours ago |
AutoZone (NYSE: AZO) isn’t often the racer at the forefront of the stock market but think of it as the reliable sedan that gets you where you need to go, no matter the conditions. Known for its unwavering stability and performance, AutoZone has become a lauded name among investors looking for consistency. Let’s talk numbers: the company recently reported a 4.5% increase in revenues and a whopping 7% growth in earnings, surpassing Wall Street’s expectations. With an 18% increase year-to-date and an average of 30% gains over the past three years, AutoZone has delivered impressive returns. But, in a rapidly changing market, the pressing question emerges – is AutoZone still worth investing in? We tackle this question head-on by exploring three critical pros and three significant cons associated with AutoZone.
Editor's Note: Analysis and insight for this article were originally sourced sourced from our friends at InvestorPlace
The Pros of Investing in AutoZone
AutoZone (AZO): Unmatched Operational Efficiency and Reach
AutoZone’s strength is in its extensive network, boasting 4,767 stores across 49 states. This expansive reach ensures customers have easy access to parts, making AutoZone synonymous with reliability. But it’s not just about numbers; the company’s cutting-edge digital infrastructure and superior supply chain management set it apart. Using advanced Big Data systems, AutoZone meticulously analyzes community demographics, purchasing habits, and sales trends. This allows them to manage inventory efficiently, ensuring that the right products are always available, which is critical for maintaining customer loyalty and operational smoothness.
AutoZone (AZO): Methodical Global Footprint Expansion
AutoZone is not just resting on its domestic laurels; it’s meticulously expanding its footprint globally. The primary focus is on Mexico and Brazil, regions ripe for growth. In the latest quarter alone, AutoZone added seven new stores in Mexico, bringing the total to 341. This methodical approach hasn’t slowed them down but ensured every step is calculated and optimized. In Brazil, plans are in motion to open 10 to 15 stores over the next two years. These markets, often fragmented, present a goldmine of opportunities that AutoZone can efficiently capitalize on using their robust supply chain network, bringing the same operational excellence to international grounds.
AutoZone (AZO): Dependable Investment with Robust Financials
While revenue growth has been relatively slow at 6.9% annually over the past five years, the company’s financial health is downright impressive. AutoZone boasts 27 consecutive quarters of double-digit earnings growth. Think about that for a moment: 27 straight quarters! This remarkable performance is due in part to their strategic development of private-label products such as EconoCraft, ValuCraft, and Duralast, which bolster profit margins. Additionally, AutoZone excels in inventory management. This ensures less cash is tied up in unsold merchandise, enhancing liquidity and enabling the company to reinvest strategically. All these factors translate into strong margins and steady financial returns, making AutoZone a dependable investment choice.
Analyst Ratings and Forecasts for AutoZone (AZO)
Let’s look at the analyst outlook:
| Category | Information |
|---|---|
| Consensus Rating | Overweight |
| Average Price Target | $1,344.27 |
| Potential Gain | 14.1% |
| Number of Ratings | 22 |
Analysts’ Summary
Analysts have a positive outlook on AutoZone, with a consensus rating of Overweight. The average price target suggests a potential gain of 14.1% from the current price. Most analysts believe the company’s strong brand presence, solid financial performance, and initiatives to enhance customer experience will drive growth.
The Cons of Investing in AutoZone
AutoZone (AZO): Potential Disruptors in the Auto Industry
Emerging trends in the auto industry pose potential challenges for AutoZone. The continued growth in U.S. new-car sales could reduce demand for the aftermarket parts that are AutoZone’s bread and butter. Newer cars often come with advanced technologies and components designed to last longer, which could diminish the need for frequent repairs and part replacements. This could directly impact AutoZone’s customer base and long-term sales.
AutoZone (AZO): Contending with High-Stakes Competitors
AutoZone operates in a fiercely competitive market. Rivals like O’Reilly Automotive (NASDAQ: ORLY), Pep Boys, and Advance Auto Parts (NYSE: AAP) are not sitting idle. They are adopting AutoZone’s best practices and aggressively pricing their products to attract customers. Additionally, competition looms from big-box retailers like Walmart (NYSE: WMT) and Target (NYSE: TGT), which also stock auto parts, sometimes at better prices. Even with its extensive network, AutoZone must battle each day to maintain its market share and customer loyalty.
AutoZone (AZO): Digital Strategy Deficiency Marks Financial Impact
In today’s digital age, a strong online presence is crucial, and this is where AutoZone seems to lag. Online sales make up only 3.5% of their total revenue, signaling a significant opportunity area that hasn’t been fully tapped. Although AutoZone has made strides like acquiring AutoAnything.com and ramping up R&D efforts, more robust digital strategies and aggressive online marketing will be crucial for future growth. Meeting modern consumer expectations for online shopping convenience is an imperative AutoZone must address to remain competitive.
Verdict: Should You Buy AutoZone?
Despite some noticeable challenges in competition and digital strategy, AutoZone’s consistent growth and robust financial health position it as a strong investment choice. The company’s significant investment in infrastructure and its methodical approach to international expansion provide a solid foundation for future growth. Balancing short-term strategies with a long-term vision, AutoZone delivers impressive financial results, evidenced by a return on invested capital of 32.3%.
At its current valuation of 13 times forward earnings, AutoZone presents a compelling investment opportunity. The pros of investing far outweigh the cons, making AutoZone a stock that remains “priced to move.”
