AutoZone New York Stock Exchange: ASO will face headwinds in 2024, but first-quarter 2025 and third-quarter 2024 results prove why it’s a quality stock to buy and hold. The company maintains growth during difficult times, maintains profits, generates strong cash flow and pays its shareholders for owning it. They provide ever-increasing value, which is clearly visible in the share price. This stock has grown steadily for decades. This trend accelerated in 2020 as growth accelerated, and now that the outlook for 2025 has become clearer, the market is breaking out to new highs.
AutoZone today
(As of 12/11/2024 ET)
- 52 week range
- US$2510.00
▼
$3416.71
- P/E ratio
- 22.34
- Target price
- US$3339.25
AutoZone stock doesn’t pay a dividend, but it doesn’t have to, as it has been aggressively repurchasing shares with no signs of stopping. Buybacks in the first quarter amounted to $505 million of recapitalized capital, helping to reduce the total by 4.7% year-over-year, leaving ample funding remaining under current authorization. The current approval is worth another $1.7 billion, or about 3% of the market capitalization, and that’s enough for three more fiscal quarters of buybacks at the current pace. By then, the board will likely authorize additional funding.
There’s only one red flag on the balance sheet, and that’s not such a bad sign. Highlights of the first quarter included increases in cash, inventories, current and total assets, only partially offset by liabilities. The bad news is that the company continues to operate with a shareholder deficit, but share repurchases are making up for it. Buybacks effectively turn cash into ash on the balance sheet, but increase shareholder value by reducing the amount, and all other balance sheet metrics are sound. The company is leveraged, but leverage is low, totaling less than 0.5x assets and 0.2x market capitalization.
AutoZone: Mixed First Quarter Results Offset by Consistent Improvement and Outlook
AutoZone’s first-quarter results were moderate compared to consensus estimates reported by MarketBeat but highlight key strengths of the business, including international expansion and diversification efforts. Net sales of $4.28 billion increased 2.1% year over year, missing consensus by only 70 basis points, as domestic PC sales slowed.
AutoZone MarketRank™ Stock Analysis
- Overall MarketRank™
- 88th percentile
- Analyst rating
- Moderate purchase
- Pros/cons
- 0.2% Minus
- Short interest level
- Healthy
- Dividend Power
- N/A
- Environmental assessment
- -1.59
- Mood News
- 0.76
- Insider trading
- Sale of shares
- Project Profit Growth
- 13.96%
See full analysis
However, the company reported strength in its domestic commercial business, offset by weaker but improving trends in the DIY auto repair market, which point to sustained improvement in the coming quarters. The international market is also a strength, growing 13.7% at currency neutral and 1% as reported. Growth in the number of stores underpinned the results, with 34 more stores in the quarter and ending the period up 3.1% year-on-year.
Margin news is also mixed, but no less favorable for investors. The increase in expenses offset the improvement in gross margin and resulted in a decrease in operating profit, but the decrease was minimal. The 0.9% decline isn’t good news, but it provides enough cash flow to support the balance sheet and return on capital outlook, and there are reasons to expect improvement. Economic headwinds for businesses and consumers are expected to ease as 2025 progresses, with tailwinds likely to develop in the second half of the year. The reason is lower interest rates and an economically friendly White House.
Sell side provides strong tailwind for AutoZone stock price
The selling side of the market, including institutions and insiders, is supporting the upward trajectory of AutoZone’s stock price. While MarketBeat’s analyst consensus estimate lags price action, it is up year-over-year, previous quarter, month-over-month and week-on-week, with early post-release adjustments increasing.
The first version captured by MarketBeat tools is Evercore ISI, which rose to $3,400, $200 above consensus. Evercore’s price target suggests the stock is fairly priced and the market is at a new all-time high. However, business trends, analysts and institutional activity suggest prices will be even higher. On the institutional side, they have bought these shares every quarter this year, and the fourth quarter saw heavy buying ahead of the earnings report, setting the stage for a post-report price surge.
AutoZone stock price is bullish. This market is in rally mode and heading to new highs after significant consolidation. Price action in 2024 will follow an ascending flat-top triangle, which is a bullish signal confirmed by new highs. This signal means that the trend will continue and the subsequent minimum rally may match the magnitude of the pattern. At the same time, the bullish case involves a move equal to the magnitude of the rally leading to the breakout. In this case, this stock could earn another $2,450.
Before you consider AutoZone, you need to hear this.
MarketBeat tracks Wall Street’s top-rated and best-performing analysts daily and the stocks they recommend to their clients. MarketBeat identified five stocks that top analysts were quietly telling their clients to buy now, before the broader market caught on… and AutoZone wasn’t on the list.
While AutoZone currently has a Moderate Buy rating among analysts, the top-rated analysts rate these five stocks as Strong Buys.
View five stocks here
Discover the next wave of investment opportunities with our report, 7 Stocks That Will Be Great in 2025. Explore the companies poised to emulate the growth, innovation and value creation of the tech giants dominating today’s markets.
Get this free report