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Valued at a market cap of $62 billion, AutoZone, Inc. (AZO) retails and distributes automotive replacement parts and accessories. The Memphis, Tennessee-based company offers a wide range of products for cars, sport utility vehicles (SUVs), vans, and light trucks. Its primary offerings include new and remanufactured automotive hard parts, maintenance items, accessories, and select non-automotive products.
Companies worth $10 billion or more are typically classified as “large-cap stocks,” and AutoZone fits the label perfectly, with its market cap exceeding this threshold, underscoring its size, influence, and dominance within the auto parts industry. The company’s core strengths lie in its expansive retail network, deep inventory management expertise, and strong brand reputation in the automotive aftermarket industry. It specializes in offering a comprehensive range of automotive parts for both do-it-yourself (DIY) customers and commercial clients. One of AutoZone’s key differentiators is its efficient hub-and-spoke distribution model, which supports rapid product replenishment and availability.
This auto parts retailer has dipped 5.6% from its 52-week high of $3,916.81, reached on Apr. 3. Shares of AZO have gained 2.3% over the past three months, lagging behind the SPDR S&P Retail ETF’s (XRT) 9.8% rise during the same time frame.
However, in the longer term, AZO has surged 32% over the past 52 weeks, considerably outperforming XRT’s 3.6% uptick over the same time frame. Moreover, on a YTD basis, shares of AZO are up 15.5%, compared to XRT’s 1% fall.
To confirm its bullish trend, AZO has been trading above its 50-day and 200-day moving averages over the past year, with small fluctuations.
On May 27, shares of AZO plunged 3.4% after its Q3 earnings release as it showed a decline in profitability. The company reported net income of $35.36 per share, down 3.6% from the same quarter last year and falling short of consensus estimates by 3.9%. However, revenue grew 5.4% year-over-year to $4.5 billion, surpassing analyst expectations by 1.4%. Despite solid top-line growth, higher costs of sales and increased operating expenses weighed on its bottom line. During the quarter, AutoZone expanded its footprint by opening 54 new stores in the U.S., 25 in Mexico, and five in Brazil, resulting in a total of 84 net new stores added.
AutoZone has outpaced its rival, Advance Auto Parts, Inc.’s (AAP) 19.3% drop over the past 52 weeks and 10.2% rise on a YTD basis.
Despite AZO’s recent underperformance relative to its industry peers, analysts remain highly optimistic about its prospects. The stock has a consensus rating of "Strong Buy” from the 26 analysts covering it, and the mean price target of $4,112.54 suggests an 11.2% premium to its current price levels.
On the date of publication, Neharika Jain did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
