AutoZone, Inc. (AZO): The Biggest Auto Parts Retailer Is Also The Best Investment

Page 2 of 2

AutoZone earned $23.48 per share in 2012, and are expected to earn $27.61 for 2013.  When the company reports its earnings next Tuesday, listen to the company’s outlook to verify that they are still on track to meet this.  Earnings are expected to further increase to $31.08 and $34.19 in 2014 and 2105, respectively, which implies a 3-year annual average forward growth rate of 13.4%, which more than justifies the 15.4 times TTM earnings that AutoZone trades for.

To compare this to the competition, Advance Auto Parts trades for 15.1 times earnings, with 9.6% forward growth projected.  O’Reilly trades at a lofty P/E of 21.3 times TTM earnings, with 15.3% forward growth.  While both of these seem fairly valued, I think it is apparent that AutoZone is currently the “cheapest” of the three.

So not only is AutoZone the largest and most successful of the three companies mentioned here, they are also the cheapest.  With such an attractive valuation and a great record of enhancing shareholder value through one of the best buybacks I’ve ever seen, AutoZone should take good care of its investors for years to come.

The article The Biggest Auto Parts Retailer Is Also The Best Investment originally appeared on Fool.com and is written by Matthew Frankel.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Page 2 of 2