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:
We started the process of determining a valid price forecast for Autozone Inc with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that Autozone Inc ranked in the 45th percentile in terms of potential gain offered. The most interesting components of our discounted cash flow analysis for Autozone Inc ended up being:
The company has produced more trailing twelve month cash flow than 92.77% of its sector Consumer Cyclical.
Autozone Inc's weighted average cost of capital (WACC) is 7%; for context, that number is higher than just 16.25% of tickers in our DCF set.
AZO's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 2%; for context, that number is higher than just 16.25% of tickers in our DCF set.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
LOCO, SGA, JAKK, BWA, and NLS 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.
(Seeking Alpha welcomes back Andrew Shapiro, Founder and Portfolio Manager at Lawndale Capital Management. You can learn more about Andrew here.) Mace Security International (OTCQX:OTCQX:MACE) is a manufacturer and provider of personal safety and security products to the consumer and law enforcement markets worldwide. Mace is headquartered and manufactures its...
Andrew Shapiro on Seeking Alpha | September 25, 2020