Yahoo Finance AutoZone, Inc. (AZO) Hit a 52 Week High, Can the Run Continue?
Shares of AutoZone (AZO) have been strong performers lately, with the stock up 17.1% over the past month. The stock hit a new 52-week high of $2703 in the previous session. AutoZone has gained 9.6% since the start of the year compared to the 7.1% move for the Zacks Retail-Wholesale sector and the 5.5% return for the Zacks Automotive - Retail and Wholesale - Parts industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on February 28, 2023, AutoZone reported EPS of $24.64 versus consensus estimate of $21.33 while it beat the consensus revenue estimate by 4.28%.
For the current fiscal year, AutoZone is expected to post earnings of $127.83 per share on $17.38 billion in revenues. This represents a 9.08% change in EPS on a 6.96% change in revenues. For the next fiscal year, the company is expected to earn $143.50 per share on $18.19 billion in revenues. This represents a year-over-year change of 12.26% and 4.65%, respectively.
Valuation Metrics
AutoZone may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
AutoZone has a Value Score of B. The stock's Growth and Momentum Scores are C and B, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 21.1X current fiscal year EPS estimates, which is not in-line with the peer industry average of 24.7X. On a trailing cash flow basis, the stock currently trades at 18.3X versus its peer group's average of 16.2X. Additionally, the stock has a PEG ratio of 1.85. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, AutoZone currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if AutoZone meets the list of requirements. Thus, it seems as though AutoZone shares could have potential in the weeks and months to come.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
AutoZone, Inc. (AZO) : Free Stock Analysis Report
