AutoZone, Inc. (AZO) Buy or Sell Stock Guide

Last updated: Sep 23, '17

The analysis below may be helpful to you if you have any of the following questions about AZO stock:

  • Is AZO a buy or a sell?
  • Should I sell or hold AZO stock today?
  • Is AZO a good buy / a good investment?
  • What are AZO analyst opinions, recommendations, ratings?

Here are AZO stock buy reasons/signals:

1. AutoZone’s leadership in the DIY segment has given the firm a comprehensive national store network which the firm can leverage to quickly build commercial sales.

2. Price takes a back seat to differentiation on the basis of service across the industry (especially convenience and part availability), which limits competition despite high margins.

3. We do not anticipate Amazon’s efforts to expand in automotive-parts retail will materially disrupt incumbent retailers, as we expect their high service levels will be difficult to replicate and should continue to command a premium price.

4. AZO profitability is improving. The YoY profit margin change was 0.28pp.

5. AZO forward P/E ratio is 11.41, and it’s low compared to its industry peers’ P/E ratios.

6. AZO average analyst rating is Buy.

7. AZO average analyst price target ($663.68) is above its current price ($574.26).

Here are AZO stock sell reasons/signals:

1. Vehicles are becoming more complex, limiting repairs that a motorist can execute independently; if drivers move away from DIY repairs, AutoZone could suffer as it relies on such revenues for about 80% of sales.

2. The dearth of large, professional-focused retailers available for acquisition will force AutoZone to grow its commercial sales organically, which could take time as relationships take years to develop.

3. Many of AutoZone’s locations were built to cater to DIY customers, limiting their ability to draw professional clients due to their distance from repair shops.

4. AZO quarterly revenue growth was 1.00%, lower than the industry and sector average revenue growth (4.62% and 2.17%, respectively).

5. AZO short share of float is 10.44%. The stock is much more frequently shorted than the average industry, sector or S&P 500 stock.

6. AZO short interest (days to cover the shorts) ratio is 4.35. The stock garners more short interest than the average industry, sector or S&P 500 stock.

What are your thoughts on AZO?

If you liked this analysis, check out Buy or Sell Stock Guides for other stocks.

Comments (0)expand_more