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Here's Why AutoZone (AZO) is a Strong Value Stock

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For new and old investors, taking full advantage of the stock market and investing with confidence are common goals.

Many investors also have a go-to methodology that helps guide their buy and sell decisions. One way to find winning stocks based on your preferred way of investing is to use the Zacks Style Scores, which are indicators that rate stocks based on three widely-followed investing types: value, growth, and momentum.

Why Investors Should Pay Attention to This Value Stock

Different than growth or momentum investors, value-focused investors are all about finding good stocks at good prices, and discovering which companies are trading under what their true value is before the broader market catches on. The Value Style Score utilizes ratios like P/E, PEG, Price/Sales, and Price/Cash Flow to help pick out the most attractive and discounted stocks.

AutoZone (AZO)

AutoZone, Inc. is one of the leading specialty retailers and distributor of automotive replacement parts and accessories in the United States. It operates in the Do-It-Yourself (DIY) retail, Do-It-for-Me (DIFM) auto parts and products markets. At the end of fiscal 2021, the company had 6,051 stores in the United States, 664 in Mexico and 52 in Brazil. Total store count was 6,767 as of Aug 28, 2021. Each store offers wide-ranging products for cars, sport utility vehicles, vans and light trucks, including new and remanufactured automotive hard parts, maintenance items, accessories, and non-automotive products.

AZO boasts a Value Style Score of B and VGM Score of A, and holds a Zacks Rank #3 (Hold) rating. Shares of AutoZone are trading at a forward earnings multiple of 18.8X, as well as a PEG Ratio of 1.6, a Price/Cash Flow ratio of 18X, and a Price/Sales ratio of 2.7X.

Value investors don't just pay attention to a company's valuation ratios; positive earnings play a crucial role, too. 11 analysts revised their earnings estimate upwards in the last 60 days for fiscal 2022. The Zacks Consensus Estimate has increased $3.51 to $115.07 per share. AZO has an average earnings surprise of 19.8%.

With strong valuation and earnings metrics, a good Zacks Rank, and top-tier Value and VGM Style Scores, investors should strongly think about adding AZO to their portfolios.


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