AZO - Embedded Expectations Analysis - 2021 08 04
AutoZone, Inc. (AZO:USA) currently trades near corporate averages relative to UAFRS-based (Uniform) earnings, with a 22.5x Uniform P/E. At these levels, the market has expectations for profitability to remain stable, but management may be concerned about the pricing environment, growth initiatives, and the Mega-Hubs build-out.Specifically, management may lack confidence in their ability to maintain EPS growth,
sustain the strength of their business fundamentals, and execute their near-term targeted build-out of Mega-Hubs. Furthermore, they may have concerns about issues regarding product and part distribution, as well as the impact of macroeconomic and inflation headwinds on the pricing environment. Finally, management may lack confidence in their ability to invest in technological and growth initiatives, make disciplined pricing investments, and retain employee talent.
AutoZone is a retailer and a distributor of automotive replacement parts and accessories. The company operates stores in the United States, including Puerto Rico and Saint Thomas, Mexico, and Brazil. Each store carries a product line for cars, sport utility vehicles, vans and light trucks, including new and remanufactured automotive hard parts, maintenance items, accessories and non-automotive products. In addition, the company has a commercial sales program that provides commercial credit and delivery of parts and other products to local, regional and national repair garages, dealers, service stations and public sector accounts. The company also sells the ALLDATA brand automotive diagnostic and repair software.
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