![]() In addition, despite the continuous price appreciation, AZO has continued to offer substantial share repurchase catalysts and has just authorized an additional $2.5 billion share buyback on top of its $2.0 billion share buyback in March '22. As shown in the image above, the management added back total interest and rent expenses to arrive at an outstanding 52.9% adjusted ROIC, up from 41.0% recorded last fiscal year. The management provides adjusted ROIC to measure its strong profitability. Strong at its Adjusted ROICĪZO: Growing Adjusted ROIC (Source: Company Filing) This snowballed to its slowing cash flow from operation amounting to $3,211.1 million, down from $3,518.5 million recorded last fiscal year. Looking at its trailing operating margin of 20.12%, it posted declining figures compared to its 20.42% recorded in FY '21 and below its average of 20.58% based on the prior five trailing quarters. Pressured MarginĪZO continues to generate a higher operating income of $3,270.70 million, which is better than its $2,987.50 million recorded in FY '21. This translated to its increasing interest expense of $64 million this Q4 '22, up 10.1% from the same quarter last year. Additionally, it accumulated a growing total debt amounting to $6,122.1 million, up from $5,269.8 million recorded in FY '21. The company ended FY '22 with a growing rent expense of $373.28 million, up 8.1% from its $345.38 million recorded in FY '21. Growing fixed expenses due to the combination of rent and interest obligations may jeopardize AZO's net margin, especially given the probability of a recession. With its deep industry knowledge, I believe AZO can successfully navigate this transition, especially in light of its recent partnership to expand into electric vehicle (EV) chargers and adapters.Īs of this writing, AZO's store growth is undoubtedly an excellent strategy to enhance its top line but its growing fixed rent expenditure and expanding interest obligation will put more significant pressure on the company's bottom line. This can keep AZO's operational environment steady and allow the company adequate time to adjust to this development. Risks presented by the Biden administration's support for the EV transition remain significant however, considering the current economic environment, we may face a long road to a viable EV transition. ![]() On top of this, its estimated total revenue of $17.01 billion or 4.66% YoY increase in FY '23, compared to its 8.34% 5-year CAGR, suggests an early warning sign of the company's challenging operating environment. However, we can witness a declining year-over-year growth performance from 15.81% recorded in the previous fiscal year.ĪZO finished FY '22 with an 8.4% YoY increase in same-store sales, down from 13.6% the previous fiscal year. It attributed its growing total revenue of $16,252.20 million, up 11.09% from $14,629.60 million reported in FY '21. In FY '22, the company ended with 6,943 stores, up from 6,767 in FY '21 and 6,549 in FY '20. Positive aspects of AZO include its great performance in achieving its expansion objectives, as seen by its growing store count and top line. Its flagship ALLDATA brand has helped the company establish a solid online retail foundation.įY '22 seems to be strong, with increasing adjusted ROIC and store count, but a closer look at AZO's decreasing margin and ROA on top of its unattractive valuation makes this stock risky as of this writing. ![]() It provides a comprehensive range of new and remanufactured automotive hard parts, maintenance items, accessories, and non-automotive products. Jetcityimage/iStock Editorial via Getty ImagesĪutoZone ( NYSE: AZO) is one of the world's leading companies in the automotive aftermarket. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |