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Should Value Investors Buy AutoZone (AZO) Stock?


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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One stock to keep an eye on is AutoZone (AZO). AZO is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 17.62, while its industry has an average P/E of 18.71. Over the past year, AZO's Forward P/E has been as high as 17.62 and as low as 12.14, with a median of 14.08.

Finally, investors will want to recognize that AZO has a P/CF ratio of 16.04. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 24.82. AZO's P/CF has been as high as 16.04 and as low as 10.83, with a median of 12.84, all within the past year.

These are only a few of the key metrics included in AutoZone's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, AZO looks like an impressive value stock at the moment.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.





This article appears in: Investing , Investing Ideas , Stocks
Referenced Symbols: AZO



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