AZO - AutoZone: Near-Term Headwinds Keep Us On Sidelines
- Domestic commercial sales increased 26% in Q3 2022 versus Q3 2021. The company’s initiative to increase commercial sales is showing results.
- The company is looking forward to growing its international business with recent investments in a new distribution center in Mexico and increasing its store count overseas (Mexico and Brazil).
- While the long-term growth narrative looks promising, there are near-term headwinds from rising oil prices, gross margin pressure from mix shift towards commercial, and an increase in SG&A from investments.
- Valuations are also at a slight premium versus historical levels.
- Hence, I prefer to be on the sidelines for the moment.
For further details see:
AutoZone: Near-Term Headwinds Keep Us On Sidelines