AutoZone is a retailer and distributor of automotive replacement parts and accessories in the United States. The company offers various products for cars, sport utility vehicles, vans, and light trucks, including new and remanufactured automotive hard parts, maintenance items, accessories, and non-automotive products. The company was founded in 1979 and is based in Memphis, Tennessee.
AZO Price Forecast Based on DCF Valuation
DCF Fair Value Target:
The table below illustrates the output of a discounted cash flow forecast using a variety of scenarios for Autozone Inc. To summarize, we found that Autozone Inc ranked in the 64th percentile in terms of potential gain offered. Specifically, our DCF analysis implies the stock is trading below its fair value by an estimated 77.67%. In terms of the factors that were most noteworthy in this DCF analysis for AZO, they are:
The company has produced more trailing twelve month cash flow than 94.06% of its sector Consumer Cyclical.
Autozone Inc's weighted average cost of capital (WACC) is 8%; for context, that number is higher than just 13.22% of tickers in our DCF set.
AZO's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 3%; for context, that number is higher than just 13.22% of tickers in our DCF set.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
DENN, FNKO, NLS, VSTO, and MDP can be thought of as valuation peers to AZO, in the sense that they are in the Consumer Cyclical sector and have a similar price forecast based on DCF valuation.
The rating on the interest only (IO) class was affirmed based on the credit quality of its referenced classes. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating.
Although the Covid-19 pandemic remains a real danger, many investors are looking past the threat to later this year, when widespread vaccination may usher in a return to normal. Analyst Zachary Fadem took a look at the retail sector on Wednesday, noting that the market is focused on the “battle of bifurcation,” pitting pandemic winners against reopening plays, growth versus value, and e-commerce versus bricks-and-mortar stores.