AutoZone Inc (AZO, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $3,132, AutoZone Inc has witnessed a daily gain of 0.97%, marked against a three-month change of 18.37%. A thorough analysis, underlined by the GF Score, suggests that AutoZone Inc is well-positioned for substantial growth in the near future.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 4/10
- Profitability rank: 10/10
- Growth rank: 10/10
- GF Value rank: 5/10
- Momentum rank: 10/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With high ranks in profitability, growth, and momentum, and moderate scores in financial strength and GF Value, GuruFocus assigned AutoZone Inc the GF Score of 93 out of 100, which signals the highest outperformance potential.
Understanding AutoZone Inc's Business
AutoZone Inc operates as a leading retailer of aftermarket automotive parts in the United States. With a market cap of $54.19 billion and sales of $17.83 billion, the company boasts an impressive operating margin of 20.6%. AutoZone Inc runs over 6,300 stores domestically, catering to both the do-it-yourself and commercial (do-it-for-me) end markets. Its extensive store footprint and distribution network enable the company to manage a wide array of stock-keeping units for various vehicle makes and models, ensuring product availability. AutoZone Inc excels in driving traffic through superior customer service, with knowledgeable staff who assist consumers in diagnosing vehicle problems, selecting the right parts, and sometimes even installation. The company's international presence includes over 750 stores in Mexico and 100 in Brazil.
Profitability Rank Breakdown
The Profitability Rank reflects AutoZone Inc's superior ability to generate profits compared to its peers. The company's Operating Margin has seen a steady increase over the past five years, with figures rising from 18.68% in 2019 to 19.90% in 2023. This consistent improvement in operating efficiency underscores AutoZone Inc's strong command over its cost structure and pricing strategies.
Additionally, AutoZone Inc's Predictability Rank of 3.5 stars out of five highlights its consistent operational performance, which bolsters investor confidence in the company's financial stability and future earnings potential.
Growth Rank Breakdown
AutoZone Inc's high Growth Rank signifies its dedication to business expansion. The company's 3-Year Revenue Growth Rate of 20.3% surpasses 82.26% of the companies in the Retail - Cyclical industry. Furthermore, AutoZone Inc has demonstrated a robust increase in its EBITDA over the past few years, with a three-year growth rate of 21.2% and a five-year rate of 21.4%. This consistent growth trajectory emphasizes the company's ability to scale its operations and enhance profitability.
Conclusion: AutoZone Inc's Path to Outperformance
Considering AutoZone Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. The company's strategic initiatives, competitive position, and adept management team further solidify its prospects for sustained growth. Investors seeking to capitalize on such robust financial health and market leadership may find AutoZone Inc an attractive addition to their portfolios.
GuruFocus Premium members can discover more companies with strong GF Scores using the following screener link: GF Score Screen.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
