There are many factors behind the continuous growth of AutoZone (AZO), an automotive aftermarket retailer, which is showing no signs of stopping anytime soon. Over the last year, the stock has returned 35.67% compared to 58.68% and 44.20%, respectively, for Advance Auto Parts (AAP) and O’Reilly Automotive (ORLY). Clearly AutoZone is an industry-laggard, however, below are a few reasons to remain optimistic on the stock.
30th-straight quarter of double digit EPS growth
In the fiscal-second quarter that ended Feb. 14, the Memphis, Tennessee-based auto parts retailer reported net sales of $2 billion, an increase of 7.3% from the same period a year ago. Accordingly, domestic same-store sales increase 4.3% for the quarter. Net income for the quarter increased by as much as 9.4% - to $192.8 million – over the same period last year, while diluted earnings per share grew 18.8% to $5.63 per share, marking the thirtieth consecutive quarter of double digit earnings per share growth. These are remarkable figures by any means and reflect the company’s ability to sustain growth.
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Average age of vehicles continues to rise
According to a recent study by Polk, a global automotive market intelligence firm, the average age of all light vehicles on US roads is at an all-time high of 11.4 years. That compares to an average age of 8.4 and 9.6 years, respectively, in 1995 and 2002. In addition, Polk expects the trend to continue through 2016, while prices of vehicles in operation (VIO) decline providing greater incentive for customers to purchase used rather than new. The shift gives way to significant opportunities for certain automotive aftermarket se...
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... the fiscal-second quarter. Year to date, the auto parts retailer has bought back 1.082 million shares and had $727 million remaining under its current share repurchase authorization.
Outlook for 2014
The company is expected to report a year-over-year revenue growth of 5.78% to $2.33 billion in the quarter ending May 14, according to consensus analysts’ estimates on Reuters. It is expected to grow per-share earnings by 16.23% to $8.45 in the quarter. For the full year 2014, the company is forecasted to report revenues of $9.49 billion and earnings of $11.28/share.
Bottom line
AutoZone has performed exceptionally well of the last several years and the industry trends indicate that the company will continue to perform well. Figuratively speaking, the company’s rearview mirror shows enormous past success, while windshield shows several opportunities down the road.
Auto Zone is immune to threats associated with economic downturns. According to AutoZone Incorporation, it has already overcome intense competitions from other auto part businesses. And the company also goes through goods that has a recall that will drop revenues (AutoZone Incorporation, p. 1).
Analyzing Wal-Mart's annual report provides a positive outlook on Wal-Mart's financial health. Given the specific ratios and its comparison to other companies in the same industry, Wal-Mart is leading and more than likely continue its dominance. Though Wal-Mart did not lead in all numbers, its leadership and strong presence of the market cements the ongoing success. The review of the current ratio, quick ratio, inventory turnover ratio, debt ratio, net profit margin ratio, ROI, ROE, and P/E ratio all indicate an upbeat future for the company. The current ratio, which is defined as current assets divided by current liabilities, is a measure of how much liabilities a company has compared to its assets. Wal-Mart in the year of 2007 had a current ratio of .90, and as of January 2008 it had a current ratio of .81. The quick ratio, which is defined as current assets minus inventory divided by current liabilities, is a measure of a company's ability pay short term obligations. Wal-Mart in the year of 2007 had a quick ratio of .25, and as of January 2008 it had a ratio of .21. Both the current ratio and quick ratio are a measure of liquidity. Wal-Mart is not as liquid as its competitors such as Costco or Family Dollar Stores Inc. I believe the reason why Wal-Mart is not too liquid is because they are heavily investing their profits for expansion and growth. Management claims in their financial report that holding their liquid reserves in other currencies have helped Wal-Mart hedge against inflationary pressures of the US dollar. The next ratio to look at is the inventory ratio which is defined as the cost of sales divided by average inventory. In the year of 2007, Wal-Mart’s inventory ratio was 7.68, and as of January 2008 it was 7.96. Wal-Mart has a lot of sales therefore it doesn’t have too much a problem of holding too much inventory. Its competitors have similar ratios though they don’t have as much sales as Wal-Mart. Wal-Mart’s ability to sell at lower prices for same quality, gives them the edge against its competition. As of the year 2007, Wal-Mart had a debt ratio of .58, and as of January 2008, it had a debt ratio of .59. The debt ratio is calculated by dividing the total debt by its total assets. Wal-Mart has a lot more assets than it does debt so Wal-Mart is not overleveraged.
The Dupont analysis shows that every dollar of assets generates 2.44 in sales which is great considering it was already good in 2014 and 2015 and keeps improving each year, the equity multiplier is 2.516 indicating that ROE is generated through efficient use of equity and leverage of 60% that can be increased slightly to surge ROE.
This paper will focus on the future of the U.S. Automobile industry as the United States recovers from the worst recession we have experienced in the past 75 years. I will provide information on the following topics pertaining to the U.S. automobile industry:
Hertz operates its car rental business through various brands in 145 different countries. Hertz was named, for the thirteenth time, by Travel + Leisure readers as the Best Car Rental Agency (Hertz Annual Report, 2013). Hertz is one of the top companies in the car rental industry by obtaining 18.6% of the market share (IBISWorld, 2014). In addition to the leading position that Hertz has built within its industry, the focus was to add more value offerings while recreating the experience in car rentals across the globe. Hertz employs both growth and competitive strategies to sustain competitiveness.
AutoZone industry is an insignificant market for the automotive industry, however, it is also an automotive aftermarket industry. The industry supply parts and services for customer automobiles to keep them operating for the roads. The business in the automotive aftermarket encompasses all products and services bought for light, medium, and enormous vehicles after the original sale in conjunction with collision repairs, tires, display products, lubricants, accessories, and replacement parts. This also includes the significant tools and equipment to make the repairs to the vehicles (Aftermarket.org, 2012). The automotive replacement parts and accessories in the United States leading distributor is AutoZone. The other components of the industry
The automotive industry is dominated by a few key players. Kallstrom explains, “The top five players have a significant 49% share of the global automobile market. This share decreased by 5.1% in the 15-year period from 1998 to 2013. Smaller companies slowly took the major automotive companies’ share away. In terms of vehicles produced, General Motors (GM), Ford (F), Volkswagen, and Toyota (TM) are still featured on the top five list.” It is important to note that Hyundai comes in at number five.
There are many different automobile companies providing buyers with many styles of cars, trucks, SUVs, and motorcycles. Toronto Star January 14, 2005 present ways to approach the automotive buying process. There are many different surveys, crash reports, and rating systems comparing different companies and their vehicles. Things you should look for when reading these published articles are who conducted the study? Who paid for it? Who gains from it? Who loses? These are all things to keep eye on as some automotive companies will run their own surveys making their products seem overpowering against the competition. Some prove their products are safer then the competition where the competition has been proven time and time again to make that survey seem inaccurate.
Used cars require more maintenance; hence AutoZone’s business gets better. Based on the jump in new vehicle sales, the economy is slowly, but surely recovering. For that reason, I do not see AutoZone’s current growth rate to continue for much longer. AutoZone’s new stores are bound to be in more inferior locations and will be less profitable than before. Hard times typically benefit auto parts retailers like AutoZone. When money gets tight, consumers often steer clear of car dealerships and keep their old cars on the road longer. Drivers who are handy with a wrench tend to fix and maintain their own cars rather take them in for service. These do-it-yourself customers are AutoZone’s core market. AutoZone was one of the top seven stocks during the financial crisis. However, as the economy has started to pick up, more drivers have been lured back to dealer’s show rooms. Rising new car sales are part of the reason why, despite AutoZone’s strong rise the stock has been stuck in
The stock opened on 02/01/2018 at $74.3, and closed on 15/05/2018 at $112.55, packaging a wholesome rise in price of $38.25 (approximately 51.5% increase). Little wonders this growth in price was consistent during the period. Very impressive I must confuse.
Autozone, inc provides strategic planning that may result in economic downturns. FoR this reason it is important that management is strategically flexible and reviews of strategic plan is required. Situational changes for weather conditions and other issues that occur out of the firm's control, once adjustments are made and normalcy occurs, sales would once again increase.
AMTEK AUTO STARTED with a clear strategy to acquire companies with strong customers in developed markets and those with strong manufacturing base in the domestic market. Amtek has focussed on growing its expertise in specific components then vertically integrating and expanding their production capacities. Its focus on value added and machined components now accounts for more than 67% of its sales.
(4) Abel, Ivan, Maali Ashamalla, and Robert Camp. Competitiveness of the US Automotive Industry: Past, Present, and Future. Rep. 2nd ed. Vol. 10. Indiana: American Society for Competitiveness, 2010. Print.
My first impression of Autozone is that Autozone holds high standard on how their company is ran. Autozone work ethics are always on point when it comes down to their reputation. Autozone believes in hard and work and making sure that their customers are always satisfied with great quality products and wonderful customer service. However, Autozone main focus is their customer service, but also their biggest organizational skills is ranking high on their financial achievements. Autozone is well known to provide well known products, and great quality information among all it’s auto retailer competitors. Not only AutoZone have to compete with other retailers such as, Pep Boys and O’Reily. Autozone biggest competition are car dealerships and auto
Apple today announced financial results for its fiscal 2015 fourth quarter ended September 26, 2015. The Company posted quarterly revenue of $51.5 billion and quarterly net profit of $11.1 billion, or $1.96 per diluted share. These results compare to revenue of $42.1 billion and net profit of $8.5 billion, or $1.42 per diluted share, in the year-ago quarter. Gross margin was 39.9 percent compared to 38 percent in the year-ago quarter. International sales accounted for 62 percent of the quarter’s