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AutoZone: Mega Hubs, DIFM, And International Expansion Will Push This Compounding Monster Higher

Jan. 03, 2022 8:36 AM ETAutoZone, Inc. (AZO)AAP, GPC, ORLY2 Comments
Wilcox Research profile picture
Wilcox Research


  • Analysts are currently underestimating AutoZone’s growth potential.
  • Revenue growth is likely to accelerate beyond the historical 2-5% range.
  • Strong free cash flows and debt issuance support an aggressive buyback program.
  • AutoZone appears undervalued on both a relative and absolute basis and I have a $2,600 price-target.

AutoZone Store

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AutoZone Investment Thesis

I last covered AutoZone (NYSE:AZO), a best-in-breed auto parts retailer, in May of 2021, and since then the stock has performed even better than I predicted, up over 35%. This is not without warrant, as

This article was written by

Wilcox Research profile picture
I am a growth at a reasonable price/value investor who enjoys stock research and analysis in my free time. I primarily cover companies with attractive free cash flow yields and opportunities for growth.In my analysis, I strive to identify what makes a business tick and how it will create value for shareholders going forward.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of AZO either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (2)

Todd Kenyon, CFA profile picture
Almost anything looks cheap w a 5% discount rate. I think most folks would prefer more return than that.
Wilcox Research profile picture
@Todd Kenyon, CFA That's true, though also the nature of DCFs; they're very subjective. WACC also isn't always the best, that's why I like to use other measures of well.

If you're curious, boosting the discount rate to 8% yields an intrinsic value of ~$2,300/share.
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