For most investors, how much a stock's price changes over time is important. Not only can it impact your investment portfolio, but it can also help you compare investment results across sectors and industries.
Another factor that can influence investors is FOMO, or the fear of missing out, especially with tech giants and popular consumer-facing stocks.
What if you'd invested in AutoZone (
AZO Quick Quote AZO - Free Report) ten years ago? It may not have been easy to hold on to AZO for all that time, but if you did, how much would your investment be worth today? AutoZone's Business In-Depth
With that in mind, let's take a look at AutoZone's main business drivers.
AutoZone, Inc. is one of the leading specialty retailers and distributor of automotive replacement parts and accessories in the United States. It operates in the Do-It-Yourself (DIY) retail, Do-It-for-Me (DIFM) auto parts and products markets. At the end of fiscal 2021, the company had 6,051 stores in the United States, 664 in Mexico and 52 in Brazil. Total store count was 6,767 as of Aug 28, 2021. Each store offers wide-ranging products for cars, sport utility vehicles, vans and light trucks, including new and remanufactured automotive hard parts, maintenance items, accessories, and non-automotive products.
Apart from providing automotive products, it also has many commercial sales programs, which provides commercial credit, and delivers parts and other products to local repair garages, dealers and service stations. AutoZone sells the ALLDATA brand’s automotive diagnostic and repair software through www.alldata.com and www.alldatadiy.com. This offers comprehensive factory-correct repair information to DIY customers along with ALLDATA repair subscription.
The company has online presence to sell automotive hard parts, maintenance items, accessories and non-automotive products through its website www.autozone.com. For commercial customers, it has www.autozonepro.com to make purchases. AutoZone selects and purchases merchandise from store support centers situated at Memphis, TN; Monterrey, MX; and Sao Paulo, BR. Also, it has office in Shanghai, China, to support sourcing efforts in Asia. This centralization improves the execution of merchandising and marketing strategies at the store level, as well as reduces expenses and cost of sales.
As of Aug 29, 2020, the company had roughly 100,000 employees, of which 60% consisted of full-time employees. Out of the total count, 91% are employed at the AutoZone stores or in direct field supervision. Further, 6% of those work at distribution centers while 3% work at store support and other functions.
The company reported a 15.8% year over year increase in net revenues to $14.6 billion in fiscal 2021, with domestic same store sales rising 13.6%. AutoZone generated net income of $2.2 billion, up 25.2% on a year-over-year basis.
Anyone can invest, but building a successful investment portfolio takes a combination of a few things: research, patience, and a little bit of risk. So, if you had invested in AutoZone a decade ago, you're probably feeling pretty good about your investment today.
A $1000 investment made in March 2012 would be worth $5,148.55, or a 414.85% gain, as of March 23, 2022, according to our calculations. Investors should note that this return excludes dividends but includes price increases.
Compare this to the S&P 500's rally of 223.93% and gold's return of 11.04% over the same time frame.
Going forward, analysts are expecting more upside for AZO.
AutoZone has been generating record revenues since 23 consecutive years and the trend is expected to continue. AutoZone's high-quality products, store-expansion initiatives and omni-channel efforts to improve customer shopping experience are boosting the company’s market share. Ramp up of e-commerce efforts, solid reputation of the Duralast brand and maintenance of competitive pricing are supporting the company’s growth. Robust buyback program of the firm also boosts investors' confidence. However, AutoZone's store expansion plans are likely to strain its near-term financials and operating margins. Technology investments to improve electronic catalogue might limit cash inflows. Further, the stretched balance sheet of the auto parts retailer plays a spoilsport. Thus, investors are recommended to wait for a better entry point.
Over the past four weeks, shares have rallied 5.18%, and there have been 10 higher earnings estimate revisions in the past two months for fiscal 2022 compared to none lower. The consensus estimate has moved up as well.