AutoZone was founded in 1979 as auto Shack by J.R. "Pitt" Hyde III - AutoZone's 1st Chairman and business executive. Once receiving his bachelor's degree in economic science from the University of North Carolina, he joined Malone & Hyde, Inc., a wholesale company founded by his grandfather. Pitt initiated and developed Malone & Hyde's specialty retailing division, starting with drug stores and expanding to include sports equipment stores and supermarkets. Pitt saw a necessity for a retail automotive component store to assist individuals with the maintenance of their vehicles therefore he created Auto Shack. He believed that the characteristics found in supermarkets - clean, well-organized store, accessible merchandise and nice client service …show more content…
The company's earnings grew 6.8% year over year. AutoZone delivered a negative average earnings surprise of 1% for the trailing four quarters. AutoZone has a long-term growth rate of 13.2%. AutoZone utilizes cash flow for opening new stores every year and they also aggressively repurchase shares. During first-quarter 2018, AutoZone opened 16 new stores, relocated one and closed another in the United States. The company also opened five new stores in Mexico. As of Nov 18, 2017, the company had 5,480 stores across 50 states in the United States, the District of Columbia and Puerto Rico; 529 in Mexico; 26 Interamerican Motor Corp. branches and 14 stores in Brazil. The total store count was 6,049 as of the same date. Domestic store openings are likely to continue in the soon to be reported quarter. This is likely to have some positive impacts on results. The company has ample liquidity to repurchase shares without compromising financial strength as well as its credit ratings. In the first quarter of fiscal 2018, AutoZone repurchased 597,000 shares for $353 million, reflecting an average price of $590 per share. The company had shares worth $471 million remaining for repurchase at the end of the fiscal. The company is focused on enhancing shareholder returns, while simultaneously maintaining adequate liquidity for its business strategies. For the …show more content…
The report will be for the fiscal period ending May 31st, 2018. The reported EPS for the same quarter last year was $8.08. The estimated EPS forecast for the next fiscal year is $55.32 and is expected to report on September 18th, 2018. Even as the economy has improved, though, AutoZone's stock remains near its highs. The recent correction has again raised the specter of a double-dip recession, which could once again resurrect the vehicle-maintenance cycle and cause new car sales to slow. AutoZone has had relatively healthy earnings over the past several years. The company's negative shareholder equity raises some concerns, although it stems largely from huge share buybacks that AutoZone uses to return cash to shareholders rather than through a dividend. Nevertheless, the company has funded those buybacks in part through increasing debt, which makes its balance sheet uglier than its peers. If the economy remains tough, then AutoZone could get another boost up from higher consumer demand. But if a true recovery takes hold, AutoZone might not look like a perfect stock for a while to come. Stocks carry a much greater risk of short-term losses than bonds or cash (the other two major asset classes). Since World War II, Wall Street has endured six bear markets (defined as a sustained decline of more than 20% in the value of the S&P 500). As a result, it's generally not a good idea to invest a big chunk of money in stocks if
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.
According to Carmax annual report (2016), used car retailing business is dependent on many economic factors and unemployment rate is one of the factors. It helps in determining consumer buying power. Gradual decrease in it from 10% to 4.9% since financial crisis, (U.S bureau of Labour Statistics, 2016), provided the boost to the automotive retail
The stock price is currently 103.31, down from a recent high of 121.50. The P/E ratio is declining at 28 and beta at .67, which is expected to grow closer to 1.0. A recent earnings surprise last December yielded a 15% difference from the lower expectations and the latest earnings reports late last month also surprised investors. Estimates for the 2000 fiscal year are being raised by a large majority of analyst who believe that earnings per share will increase and the stock price will reach close to 150.
Trinity Industries journey started in 1933 when they were known as Trinity Steel, founded by C.J Bender in Dallas. The company manufactured butane tanks, had revenues of $2.5 million, and 200 employees. Trinity steel was growing by producing large petroleum tanks, steel fabrication for refineries, and leasing trucks. However, in 1957, the company faced increasing competition and business started to decline. In 1958, there was a merger between Trinity Steel, Dallas Tank, and Bender Wallace Development Company. Trinity Industries was formed, incorporated, and went public. By 2007, Trinity Industries had 14,400 employees working in 22 business units with revenues of $3.8 billion. Bu’s were grouped into 5 line of business (2008):
As the nation was introduced into the current recession, the auto industry and its labor was likely hurt more than any other industry. Few years ago it was the homebuilding industry that was troubled the most and held the first place, but it gave that position over to the auto industry the following year. Why was this industry affected more than any other is very interesting and complex situation. There are several factors why there was such a huge negative impact on this industry, its performance, and the labor involved. Some of the major reasons are very high foreign competition, higher oil prices, and certainly the recession.
Picciotto, Dan and Nishit K Madlani. "The Global Auto Industry Shifts Its Focus To OVerseas And Emerging Markets." Credit Week (2013): 26. Online. 21 May 2014. .
In the latter part of 2008, the United States’ economy was rapidly plummeting - the stock market crashed, the housing bubble burst and gas prices skyrocketed. The majority of U.S. based firms faced the reality that they would not be able to survive during such desperate economic times. The U.S. automobile industry, in particular, began to buckle under the depressed economy. The government stepped in proposing a multi-billion dollar bailout to stimulate the economy and restore economic balance. The possibility of this unprecedented government intervention was condemned by many economists. If the government helped the ailing automotive industry, this industry would have to tighten their expenditures and plan for the future to prove to critics of the bailout that they would use the government funding to add value to the economy once again.
Like any organization, AutoZone creates performance evaluations daily, monthly, quarterly, and the annual reporting of the organizations performances are identified in what is known as SWOT analysis. This analysis refers to the strengths and weaknesses the company can address and the opportunities and threats that exist in the given market. The strength and weaknesses are the organizations ways of analyzing internal issues and exploiting strengths while the organization tries to address the weaknesses as it relates to competitors in the industry.
Currently Azalea's average ROA is at 68%. As compared with industry norms this is wonderful. However, debt for the company is at 87% and needs to be much less. This too can be corrected with time and effort. The quick ratio is at 1 and short-term credit remains safe. Cash flow will also need to be improved by implementing a gradual price increase and initiating key retail locations.
Any successful business owner or investor is constantly evaluating the performance of the companies they are involved with, comparing historical figures with its industry competitors, and even with successful businesses from other industries. To complete a thorough examination of any company's effectiveness, however, more needs to be looked at than the easily attainable numbers like sales, profits, and total assets. Luckily, there are many well-tested ratios out there that make the task a bit less daunting. Financial ratio analysis helps identify and quantify a company's strengths and weaknesses, evaluate its financial position, and shows potential risks. As with any other form of analysis, financial ratios aren't definitive and their results shouldn't be viewed as the only possibilities. However, when used in conjuncture with various other business evaluation processes, financial ratios are invaluable. By examining Ford Motor Company's financial ratios, along with a few other company factors, this report will give a clear picture of how the company is doing now and should do in the future.
The Canadian Tire company is among Canada’s top 35 publicly traded company. Its operations are based on an interrelated network of businesses that engage in retailing apparel, petroleum, and hard goods as well as financial and automotive services. The company runs its venture as a franchise with the stalls being owned or leased by the company and the merchandise in the stores being the property of the franchisees. The Canadian Tire Corporation has tried to enter the American market twice but failed in both attempts. The first one was in the 1980’s when it bought White Auto Store in Texas. However, after a period of continued loss-making, the company wound up its operations in the
In 2009 Toyota Motors (TM) posted a net loss of $4.6 billion ("Market watch," 2014). From 2009 to 2011 Toyota encountered a number of factors contributing to their economic downturn. It began with recalling millions of vehicles, for quality related problems, followed by natural disasters hitting northeastern Japan. These disasters wiped out Toyota’s production capabilities (Tabuchi & Vlasic, 2014). While these events were occurring, the cloud of the 2008 global financial crisis was still being felt. This crisis weakened demand in the automotive industry. This weakened demand increased the competitive landscape for all automotive manufactures. This drove down automotive prices and effectively contribution margins (i.e. sold less and made less per sale). At the end of 2011 Toyota’s stock had collapsed by approximately 70% from its peak in 2007 (Daltorio, 2012).
Fueled by the 2008 recession, the automotive industry suffered a crisis that hurt the United States’ national economy.
BMW and Audi both build cars that have a reputation for security, reliability and quality. These traits transcend into their financial statements, making both of them a good investment due to their debt status, and management effectiveness. Our recommendation as a bank loan analyst would be for BMW due to its superior liquidity and low risk. When evaluating management performance for equity investment, Audi is clearly a better investment. This is primarily due to its superior asset management, debt allocation, and inventory management.