Should the firm use all of this authorization at the stock’s current price in fiscal 2021, investors would see a 2.9% yield. There might be better investments than AutoZone … Despite its recent underperformance, I think this stock offers excellent risk/reward based on AutoZone’s: AutoZone has grown its revenue in each of the past 22 years. ft Than O’Reilly & Advance Auto Parts. AutoZone already supplies several parts for Tesla’s such as struts, brake pads, rotors, windshield wipers, headlights, cabin air filters, and mirror replacement glass. Figure 2: Average Age of U.S. Light Vehicles Since 1996. Scenario 1: In this worst-case scenario, I assume: In this scenario, AutoZone’s NOPAT declines 2% compounded annually over the next 10 years, and the stock is worth $1,152/share today – near the current stock price. Share Repurchases Are Back and Could Provide Significant Yield. AutoZone has a fifty-two week low of $684.91 and a fifty-two week high of $1,297.82. Critical Details Found in Financial Filings by My Firm’s Robo-Analyst Technology. So why is Amazon stock so … AZO’s balance sheet makes AutoZone stock a high-risk play despite its modest valuation. So if you are interested in AutoZone, you should check out this free report on analyst forecasts for the company. Free services such as AutoZone’s tool loaning program, diagnostic services, check engine light readings, battery testing, battery charging, and collection of oil for recycling are important to building customer loyalty and make switching costs high. While the firm consistently outperforms the industry already, and its customer service creates a lasting competitive advantage, long-term demand for auto parts remains important to AutoZone’s future profit growth. Wiz Raises $100M To Vie With Palo Alto Networks In $8B Market, You’re Killing Us Out There And You Don’t Even Know It, Biden's Infrastructure Bill Could Be $2 Trillion Behemoth—Here's What Goldman Sachs Is Expecting, See the math behind this reverse DCF scenario, Long history of growing faster than its peers, Opportunities for continued domestic and international growth, Superior customer service, which diminishes threats from Amazon (AMZN) and Walmart (WMT), Position to benefit from rising used car sales, rising average age of cars on the road, and the forecasted growth in the number of global vehicles, Stock trading as if profits will permanently decline by 30%, NOPAT margin falls to 13% (10-year average compared to 16% TTM), Revenue declines 1.5% compounded annually for ten years (compared to 3.5% compounded annual consensus estimated revenue growth from 2021 to 2023), NOPAT margin falls to 14% (five-year average compared to 16% TTM), Revenue declines 3.5% compounded annually from 2021 to 2023 (consensus estimates) and grows at 3% a year thereafter, which is below the average global GDP growth rate since 1961 (3.5%), Largest and most profitable firm in its industry, A customer-service intensive offering that non-specialty retailers cannot replicate, Existing relationships with commercial customers, Significant tailwinds for auto part demand: large increase in conventional vehicles and average age of vehicles over the next decade, EVs are not growing fast enough to keep auto part demand from growing, Valuation implies profits permanently decline by 30%, PFS Bretton Fund (BRTNX) – 5.0% allocation and very attractive rating, Fiera Capital U.S. Equity Long-Term Quality Fund (FCUIX) – 4.0% allocation and attractive rating, Invesco Endeavor Fund (ATDCX) – 4.0% allocation and very attractive rating, Clifford Capital Partners Fund (CLIFX) – 3.4% allocation and attractive rating, Fiera Capital Global Equity Fund (FCGIX) – 3.0% allocation and attractive rating. Increasing investment in digital opportunities could boost AutoZone Inc.'s (AZO) stock performance. AutoZone has grown core earnings by 9% compounded annually over the past decade and 10% compounded annually over the past two decades. AutoZone… Combining human. Electric Vehicles Require Maintenance, Too. AutoZone's ROCE is boosted somewhat by its middling amount of current liabilities. The following funds receive my attractive-or-better rating and allocate significantly to AZO: Disclosure: David Trainer, Kyle Guske II, and Matt Shuler receive no compensation to write about any specific stock, style, or theme. But volatility would increase. Apart from total debt, one of the most notable adjustments to shareholder value was $1.3 billion in excess cash. Furthermore, the lingering reluctance to fly and use public transportation likely provides a boost to VMT over the medium to long term. Instead, due to the proliferation of noise traders, the focus is on short-term technical trading trends while high-quality fundamental research is overlooked. New Constructs leverages reliable fundamental data to provide unconflicted insights into the fundamentals and valuation of private and public businesses. Abercrombie & Fitch Stock To Trade Lower Post Q4? Vous pouvez modifier vos choix à tout moment dans vos paramètres de vie privée. AutoZone’s peers include O’Reilly Automotive, Advance Auto Parts, Genuine Parts Company (GPC), and CarParts.com Inc. (PRTS). VMT fell from 275 billion in February 2020 to just 160 billion in April 2020, before improving to 240 billion (just 13% below February 2020’s level) in August 2020 (the last date available). The company said it earned $289 million, $8.47 per share when adjusted and fully diluted , on revenues of $2.413 million. Balance Sheet: Imade $2.7 billion of adjustments to calculate invested capital with a net decrease of $1.2 billion. While the rest of the economy spends 2020 recovering (or at least trying) from the global covid-19 shutdowns, Tesla Inc [] bounced back to triple its pre-2020 … AZO | Complete AutoZone Inc. stock news by MarketWatch. AutoZone’s ability to provide specialized customer service that its big box retailer and e-commerce competitors cannot match gives it a major competitive advantage. The following competitive advantages help AutoZone grow its market share over the long term: These days, fewer investors focus on finding quality capital allocators with shareholder friendly corporate governance. Used Care Sales Have Recovered Above Pre-COVID Levels, Revenues Rose Despite COVID-Related Decline in Miles Driven. Since 2015, AutoZone’s domestic same store sales have grown by 3.1% compounded annually compared to just 1.8% compounded annual growth for the U.S. auto parts retail market. AutoZone … The ability to grow sales while reducing expenses means AutoZone’s profitability is best amongst its peers, too. Figure 10 compares the firm’s implied future NOPAT in this scenario to its historical NOPAT. He was a 5-yr member of FASB's Investors Advisory Committee. Insider Trading and Short Interest Trends. The average AutoZone stock … David is CEO of New Constructs (www.newconstructs.com). In this scenario I assume: In this scenario, where AutoZone’s NOPAT grows by just 3% compounded annually over the next 10 years, the stock is worth $2,017/share today – a 73% upside to the current stock price. AutoZone’s superior profitability drives the firm’s consistent growth in core earnings[2]. While it is true that EVs have fewer parts and lower maintenance costs, their maintenance costs are only 26% lower than conventional vehicles[1]. This worst-case scenario implies AutoZone’s NOPAT a decade from now will be 32% below its fiscal 2020 NOPAT. © 2021 Forbes Media LLC. Figure 7: AutoZone’s NOPAT Margin, Invested Capital Turns & ROIC vs. Peers’, AutoZone’s NOPAT Margin, Invested Capital Turns & ROIC vs. Peers’. Per Figure 2, the average age of light vehicles on the road in the U.S. has steadily climbed from 8.5 years in 1996 to 11.9 years in 2020. Stock buyback programs are not always utilized effectively. I think the rising age of cars provides long-term demand for auto parts that will drive long-term growth in profits for AutoZone. The paper empirically shows that my firm’s data is superior to “Operating Income After Depreciation” and “Income Before Special Items” from Compustat, owned by S&P Global (SPGI). Two reasons why the market might be missing a trick with Autozone Inc 19th Jan by Ben Hobson Buying quality merchandise when it's on sale is a stock market strategy used by some of the … footnotes) of hundreds of thousands of corporate financial filings to reveal critical details that drive uniquely comprehensive and independent credit and equity investment ratings, valuation models and research tools. Additionally, if the increase in revenue attributed to new DIY customers persists, future sales could receive a nice boost and carry the stock price higher along with it. The AutoZone 52-week high stock price is 1297.82, which is 11.9% above the current share price. Source: time anchor via Flickr (Modified) Autozone did … Multiple long-term tailwinds will drive profit growth for this company while its stock is priced for permanent profit decline. Though the firm temporarily suspended its repurchase activity in fiscal 2020 to conserve liquidity in response to uncertainty related to COVID-19, AutoZone has since announced it plans to resume share repurchases in fiscal 1Q21. New Constructs leverages reliable fundamental data to provide unconflicted insights into the fundamentals and valuation of private and public businesses. AutoZone, Inc. (AZO) stock is trading at $1,193.90 as of 9:42 AM on Thursday, Jan 2, a gain of $2.59, or 0.22% from the previous closing price of $1,191.31. For the purposes of choosing an investment, lower is better. AutoZone’s return on invested capital (ROIC) of 26% is also much higher than its peer group’s ROIC of 18%. This means there is potential for growth in the value of AutoZone stock. I think the average age of vehicles on the road will continue to rise as used cars sales rise. Discover historical prices for AZO stock on Yahoo Finance. One of the largest adjustments was $354 million in other comprehensive income. Combining human expertise with cutting-edge machine learning (ML) technologies (featured by Harvard Business School), the firm shines a light in the dark corners (e.g. David is a distinguished investment strategist and corporate finance expert. See all adjustments to AutoZone’s valuation here. Used car trends. AutoZone calls vehicles seven years and older “our kind of vehicles” because these vehicles are typically out of warranty and require more maintenance and repair than newer ones. While seasonally-adjusted VMT in the U.S. have recovered from their April lows, they are still well below levels from before the pandemic. If AutoZone … When investing in a tool like stocks, you need to focus on a long term: a few years or a few dozen years. The Investor Relations website contains information about AutoZone, Inc's business for stockholders, potential investors, and financial analysts. Figure 9: Stock Price vs. Economic Book Value (EBV) per Share, AZO’s Current Price Implies 30% NOPAT Decline. But here's the really curious thing: Nomura actually cut its price targets for AutoZone (now $1,090 a share, down from $1,200), for … [2] My firm’s core earnings are a superior measure of profits, as demonstrated in Core Earnings: New Data & Evidence a paper by professors at Harvard Business School (HBS) & MIT Sloan. At the end of fiscal 2020, AutoZone had $796 million remaining under its authorization to repurchase shares. Informations sur votre appareil et sur votre connexion Internet, y compris votre adresse IP, Navigation et recherche lors de l’utilisation des sites Web et applications Verizon Media. There are currently 364 thousand shares sold short, which equates to 2% of shares outstanding and two days to cover. Découvrez comment nous utilisons vos informations dans notre Politique relative à la vie privée et notre Politique relative aux cookies. The Bottom Line On AutoZone's ROCE . Share buybacks by S&P 500 - Get Report companies totaled more than $567 billion in the 12 months ended Sept. 31, 2014, a 27% increase over the … Given the recession-proof nature of the company’s products and the past growth of … Should VMT reach pre-COVID levels, demand for AutoZone’s offerings should increase as well, and investors may realize the disconnect between the firm’s strong growth potential and undervalued stock price. … “What’s been driving this stock the last really 18 … Harvard Business School and MIT Sloan are not the only institutions to write papers on the superiority of our data and research. Breaking Down AutoZone’s Buybacks. You can see all the adjustments made to AutoZone’s income statement here. So you may wish to see this free collection of high … Terms of investing in why is autozone stock so high. Figure 1: Change in YoY Sales: AutoZone’s Same Store vs. Total U.S. Market, AutoZone's Domestic Same Store Sales Are Growing Faster Than the Market. Paying $830 for one share of stock seems unreasonable for most retail investors. But in this case, AutoZone’s buybacks have greatly rewarded shareholders. Figure 1 compares AutoZone’s year-over-year (YoY) domestic same store growth to the U.S. auto part retail sales growth. Yahoo fait partie de Verizon Media. Some analysts say there is still room for it to run. Of course AutoZone may not be the best stock to buy. Figure 10: Current Valuation Implies Severe, Long-Term Decline in Profits: Scenario 1, Current Share Price Means NOPAT Falls to 2016 Levels. AZO: Get the latest AutoZone stock price and detailed information including AZO news, historical charts and realtime prices. AutoZone’s current economic book value is $1,757/share – a 51% upside to the current stock price. I first made AutoZone a Long Idea in February 2014 before closing it out just under a year later for an 8% gain vs. 10% for the S&P 500. AutoZone Inc. suffered its biggest-ever stock price plunge Tuesday, with the auto parts and accessories retailer’s disappointing results prompting a two-notch downgrade from a …