GuruFocus Premium Membership

Serving Intelligent Investors since 2004. Only 96 cents a day.

Free Trial

Free 7-day Trial
All Articles and Columns »

Here's Why Autozone Is a Stock That Investors Need to Watch

August 24, 2014 | About:



Reseller's exchange retailer Autozone (AZO) has done well in 2014. Even though the stock has been exceptional than the S&P 500, its performance has been weaker than O'Reilly Automotive (ORLY) and Advance Auto Parts (AAP). Then again, Autozone is a steady performer and is the cheapest of the part from a valuation perspective, which is the reason investors should consider investigating it.

Strong results and smart strategies

Autozone's late second from last quarter results were robust. The second-largest automobile parts retailer in the U.s. experienced strong interest from Mexico, Brazil, and North America. Its revenue for the second from last quarter rose 6.2% to $2.3 billion from last year.

Administration is pleased with the progress the organization is making and anticipates tremendous open door proceeding. With just 76% of its stores running a business program at present, the organization believes that it can keep developing its business at a robust pace.

A resilient performer

Autozone performed well in the quarter in spite of various challenges such as a terrible climate. Its sales vacillated consistently with the climate design. Furthermore, because of an extreme nature, its customers are monetarily constrained, while the vehicle parts retailer is also under pressure because of increased gas prices.

The acquisition of Auto Anything gave great dividends, alongside different business units such as and ALLDATA. The organization is attempting to make its business digitally-coordinated, which, as indicated by administration, will help it strengthen customer relationship and increase sales.

The route ahead

Autozone is focusing on it business to increase profitability. Moreover, it will be making use of engineering to enhance customer experience and upgrade its operations, including proper stock administration.

The organization has attempted a strategic survey of its stock, after which it is presently designing, creating, and actualizing tests focused on enhancing its nearby market stock accessibility. Autozone is utilizing sure initiatives to enhance its stock scope in all stores.

First, it has increased the recurrence of replenishment from its distribution centers. Second, it is presently offering a more extensive assortment of products from its center stores. Next, it has increased its store stock holding limit. Lastly, the organization has enhanced the overnight conveyance of its products. Also, Autozone has included new items the basis of customer interest.

A superior pick than peers

Autozone faces extreme rivalry from its peers such as Advance Auto Parts and O'Reilly Automotive. Both these companies reported solid development in their late quarters, beating consensus estimates.

Also, Autozone's PEG degree of 1.19 is lower than O'Reilly's 1.37, signifying relative undervaluation. Albeit Advance Auto sports a superior PEG degree of 0.96, investors should keep in mind that it has the worst gross margin metric of the three.

Advance Auto has a gross margin of 48%, while O'Reilly is better at 51%. On the other hand, it is Autozone which is the best of the parcel with a gross margin figure of 52%. Moreover, Autozone has the top most operating margin of the three companies. Its metric stands at 19%. Competitors Advance Auto and O'Reilly are behind as they have operating margins of 10% and 17%, respectively.


Fundamentals are with Autozone, while the aggressive take off of the business program and stock administration will prompt solid development later on. So, Autozone looks like a solid pick that investors should examine.

Rating: 0.0/5 (0 votes)


Please leave your comment:

Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial