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AutoZone Continues to Open New Stores Despite Expense Woes


On Jan 8, we issued an updated research report on AutoZone, Inc. AZO.

The company uses its robust cash position to open new stores every year. During first-quarter 2018, AutoZone opened 16 new stores. Also, during the quarter, the company relocated one and closed another store in the United States. It also opened five new stores in Mexico. As of Nov 18, 2017, the company had 5,480 stores across 50 states in the United States, the District of Columbia and Puerto Rico, 529 in Mexico, 26 Interamerican Motor Corp. branches and 14 stores in Brazil. The total store count was 6,049 as of that date.

During fiscal 2017, AutoZone registered a record $10.9 billion in sales. The company’s sales are likely to grow further in 2018. In first-quarter fiscal 2018, revenues increased 4.9% on a year-over-year basis to $2.59 billion. During the quarter, same store sales results showed an improved performance.

The company has outperformed the industry it belongs to in the last three months. Its shares have increased 30.4% compared with the industry’s growth of 16.6 %.

However, AutoZone’s plans of opening distribution centers are likely to raise its capital and operating expenses over the next few years. The company is also investing in the development of mega hub stores.

AutoZone currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

A few better-ranked automobile stocks in the same space are Allison Transmission Holdings, Inc. ALSN, Denso Corp. DNZOY and Lear Corporation LEA, each carrying a Zacks Rank #2 (Buy).

Allison Transmission has a long-term growth rate of 10%. The company’s shares have gained 36.4% in the past 12 months.

Denso has a long-term growth rate of 10.1%. The company’s shares have gained 43.4% in the past 12 months.

Lear Corporation has a long-term growth rate of 7.1%. The company’s shares have gained 39.3% in the past 12 months.

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