Is There Now An Opportunity In AutoZone Inc (AZO)?
Let's talk about the popular AutoZone Inc (NYSE:AZO). The company's shares saw a decent share price growth in the teens level on the NYSE over the last few months. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on AZO’s outlook and valuation to see if the opportunity still exists. Check out our latest analysis for AutoZone
Is AZO still cheap?
According to my valuation model, AZO seems to be fairly priced at around 10% below my intrinsic value, which means if you buy AZO today, you’d be paying a reasonable price for it. And if you believe that AZO is really worth $629.06, then there’s not much of an upside to gain from mispricing. In addition to this, it seems like AZO’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s fairly valued. This is because AZO’s stock is less volatile than the wider market given its low beta.
What kind of growth will AZO generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares.Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of AZO, it is expected to deliver a relatively unexciting earnings growth of 9.47%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for AZO, at least in the near term.
What this means for you:
Are you a shareholder? AZO’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at AZO? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping tabs on AZO, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for AZO, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on AutoZone. You can find everything you need to know about AZO in the latest infographic research report. If you are no longer interested in AutoZone, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
