AutoZone, Inc.
Thesis
AutoZone's stock price fell significantly due to concerns about competition from Amazon, but the company's fundamentals remain strong. With the stock trading in the low $500s, it was undervalued at 9.5x EBIT and 12x earnings, especially compared to M&A deals in the industry that were done at 13x EBIT. Applying a 12x EBIT multiple suggests the stock is worth at least $750, making it a compelling buy.
Did it work?
The stock price has increased by 513.2% since the pitch, significantly exceeding the target price of $750 based on a 12x EBIT multiple. This strong performance confirms the thesis that AutoZone was undervalued and that its fundamentals remained robust despite competitive concerns. The substantial return over the elapsed time of 115 months indicates that the investment thesis played out successfully.
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