Inspecting AutoZone Stock Ahead of Shareholder Meeting

AZO remains stymied by its year-to-date breakeven level

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When we last checked in with AutoZone, Inc. (NYSE:AZO), the stock was moving in the opposite direction one would expect after a blowout corporate report. Now the stock is in focus, with the auto parts retailer's annual stockholder meeting set to begin later today.

Auto-parts retailers are just another category of retail companies that have struggled throughout the Covid-19 pandemic. With the government shutdowns, specifically closing schools, offices, and gyms, less people are driving. Those that are still driving are putting significantly less miles on their cars, requiring less frequent repairs. But there is an upside; the economic woes that have hit individuals are likely leading drivers to keep and repair existing cars in lieu of purchasing new cars due to budget restrictions.

Despite an upgrade to "buy" from "hold" at Jefferies last Friday, AutoZone stock is still contending with its year-to-date breakeven level. And while there's support beneath at the stock's 200-day moving average, there's not much in store for contrarian tailwinds; most analysts already rate AZO a "buy," and a slim 2.3% of the stock's total available float is dedicated to short sellers.

AZO Stock Chart

AZO still seems to be a viable option for long-term investors. AutoZone stock currently trades at a price-earnings ratio of 15.08 and has shown amazing consistency and resilience in its net income and revenue growth. Although AutoZone's business isn’t growing at a rapid pace, the company has increased their revenue and profit numbers year after year. AutoZone has added more than $2 billion to its total annual revenue, and about $550 million in net profits since 2017. A big red mark comes when evaluating AutoZone's current balance sheet. AZO carries $8.04 billion in total debt with an equity of -$878 million.

Those looking to speculate on the stock may want to consider options. A post-earnings volatility crush means the security's Schaeffer's Volatility Index (SVI) of 28% is in the low 14thpercentile of its annual range. In other words, options players are pricing in relatively low volatility expectations right now.


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