3 Mistaken Reasons to Sell AutoZone, Inc. (AZO)

Expensive valuation

Bear Argument: AutoZone shares are up 250% over the past five years. The stock is priced for perfection at 12 times forward earnings.

AutoZone is the cheapest name in the auto parts space with the stock sporting the lowest P/E multiple.

This markdown is deserved in some respects as AutoZone has a lower projected growth rate than rival O’Reilly.

However, AutoZone still trades at a discount when you value the stock on a PEG basis. With shares trading a 12.4 times forward earnings and a projected 14.5% EPS growth rates, the stock is valued at reasonable 0.9 PEG ratio.

Foolish bottom line

AutoZone reports its second-quarter earnings on Feb. 26. Given recent results from competitors, investors can expect a positive report. Keep a close eye on the company’s same-store sales figure for confirmation of domestic market improvement and additional commentary on AutoZone’s international expansion efforts.

The article 3 Mistaken Reasons to Sell AutoZone originally appeared on Fool.com and is written by Robert Baillieul.

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