What Does AutoZone, Inc.'s (NYSE:AZO) Share Price Indicate?

Let's talk about the popular AutoZone, Inc. (NYSE:AZO). The company's shares received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$2,104 at one point, and dropping to the lows of US$1,794. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether AutoZone's current trading price of US$1,795 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at AutoZone’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for AutoZone

What's the opportunity in AutoZone?

Good news, investors! AutoZone is still a bargain right now. My valuation model shows that the intrinsic value for the stock is $2280.17, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. What’s more interesting is that, AutoZone’s share price is theoretically quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

Can we expect growth from AutoZone?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a relatively muted profit growth of 7.0% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for AutoZone, at least in the short term.

What this means for you:

Are you a shareholder? Even though growth is relatively muted, since AZO is currently undervalued, it may be a great time to increase your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on AZO for a while, now might be the time to enter the stock. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy AZO. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed buy.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. In terms of investment risks, we've identified 2 warning signs with AutoZone, and understanding these should be part of your investment process.

If you are no longer interested in AutoZone, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.