Stock Analysis on Net

AutoZone Inc. (NYSE:AZO)

This company has been moved to the archive! The financial data has not been updated since December 18, 2023.

Economic Value Added (EVA)

Microsoft Excel

EVA is registered trademark of Stern Stewart.

Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.


Economic Profit

AutoZone Inc., economic profit calculation

US$ in thousands

Microsoft Excel
12 months ended: Aug 26, 2023 Aug 27, 2022 Aug 28, 2021 Aug 29, 2020 Aug 31, 2019 Aug 25, 2018
Net operating profit after taxes (NOPAT)1 2,804,292 3,175,174 2,391,436 2,065,020 1,873,709 1,350,649
Cost of capital2 9.49% 9.66% 9.50% 8.95% 9.06% 8.69%
Invested capital3 6,986,333 6,383,299 6,599,731 7,636,912 5,730,767 5,277,396
 
Economic profit4 2,141,218 2,558,846 1,764,695 1,381,404 1,354,320 892,038

Based on: 10-K (reporting date: 2023-08-26), 10-K (reporting date: 2022-08-27), 10-K (reporting date: 2021-08-28), 10-K (reporting date: 2020-08-29), 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-25).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 2,804,2929.49% × 6,986,333 = 2,141,218

Item Description The company
Economic profit Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital. AutoZone Inc. economic profit increased from 2021 to 2022 but then slightly decreased from 2022 to 2023 not reaching 2021 level.

Net Operating Profit after Taxes (NOPAT)

AutoZone Inc., NOPAT calculation

US$ in thousands

Microsoft Excel
12 months ended: Aug 26, 2023 Aug 27, 2022 Aug 28, 2021 Aug 29, 2020 Aug 31, 2019 Aug 25, 2018
Net income 2,528,426 2,429,604 2,170,314 1,732,972 1,617,221 1,337,536
Deferred income tax expense (benefit)1 (25,707) 185,594 (34,432) 51,077 35,051 (124,261)
Increase (decrease) in allowance for credit losses2 (1,800) (1,900) 1,400 1,500 2,400 200
Increase (decrease) in LIFO reserve3 (44,000) 320,300 21,700 47,900 47,500 (37,500)
Increase (decrease) in accrued sales and warranty returns4 7,659 3,278 62 (1,954) 14,285 505
Increase (decrease) in equity equivalents5 (63,848) 507,272 (11,270) 98,523 99,236 (161,056)
Interest expense, less capitalized interest 318,426 197,686 200,754 206,854 192,200 180,163
Interest expense, operating lease liability6 123,798 110,005 98,708 94,299 14,283 60,581
Adjusted interest expense, less capitalized interest 442,224 307,691 299,462 301,153 206,483 240,744
Tax benefit of interest expense, less capitalized interest7 (92,867) (64,615) (62,887) (63,242) (43,361) (62,353)
Adjusted interest expense, less capitalized interest, after taxes8 349,357 243,076 236,575 237,911 163,122 178,391
(Gain) loss on marketable securities (152) 123 137 (34) (62)
Interest income (12,054) (6,048) (5,417) (5,689) (7,396) (5,636)
Investment income, before taxes (12,206) (6,048) (5,294) (5,552) (7,430) (5,698)
Tax expense (benefit) of investment income9 2,563 1,270 1,112 1,166 1,560 1,476
Investment income, after taxes10 (9,643) (4,778) (4,182) (4,386) (5,870) (4,222)
Net operating profit after taxes (NOPAT) 2,804,292 3,175,174 2,391,436 2,065,020 1,873,709 1,350,649

Based on: 10-K (reporting date: 2023-08-26), 10-K (reporting date: 2022-08-27), 10-K (reporting date: 2021-08-28), 10-K (reporting date: 2020-08-29), 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-25).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in allowance for credit losses.

3 Addition of increase (decrease) in LIFO reserve. See details »

4 Addition of increase (decrease) in accrued sales and warranty returns.

5 Addition of increase (decrease) in equity equivalents to net income.

6 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 3,174,302 × 3.90% = 123,798

7 2023 Calculation
Tax benefit of interest expense, less capitalized interest = Adjusted interest expense, less capitalized interest × Statutory income tax rate
= 442,224 × 21.00% = 92,867

8 Addition of after taxes interest expense to net income.

9 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 12,206 × 21.00% = 2,563

10 Elimination of after taxes investment income.

Item Description The company
NOPAT Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income. AutoZone Inc. NOPAT increased from 2021 to 2022 but then slightly decreased from 2022 to 2023.

Cash Operating Taxes

AutoZone Inc., cash operating taxes calculation

US$ in thousands

Microsoft Excel
12 months ended: Aug 26, 2023 Aug 27, 2022 Aug 28, 2021 Aug 29, 2020 Aug 31, 2019 Aug 25, 2018
Income tax expense 639,188 649,487 578,876 483,542 414,112 298,793
Less: Deferred income tax expense (benefit) (25,707) 185,594 (34,432) 51,077 35,051 (124,261)
Add: Tax savings from interest expense, less capitalized interest 92,867 64,615 62,887 63,242 43,361 62,353
Less: Tax imposed on investment income 2,563 1,270 1,112 1,166 1,560 1,476
Cash operating taxes 755,199 527,238 675,083 494,541 420,862 483,931

Based on: 10-K (reporting date: 2023-08-26), 10-K (reporting date: 2022-08-27), 10-K (reporting date: 2021-08-28), 10-K (reporting date: 2020-08-29), 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-25).

Item Description The company
Cash operating taxes Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction. AutoZone Inc. cash operating taxes decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.

Invested Capital

AutoZone Inc., invested capital calculation (financing approach)

US$ in thousands

Microsoft Excel
Aug 26, 2023 Aug 27, 2022 Aug 28, 2021 Aug 29, 2020 Aug 31, 2019 Aug 25, 2018
Current portion of finance lease liabilities 86,916 92,877 89,932 67,498 56,246 52,290
Long-term debt 7,668,549 6,122,092 5,269,820 5,513,371 5,206,344 5,005,930
Finance lease liabilities, less current portion 200,702 217,428 186,122 155,855 123,659 102,013
Operating lease liability1 3,174,302 3,081,380 2,869,410 2,725,406 2,131,812 1,852,615
Total reported debt & leases 11,130,469 9,513,777 8,415,284 8,462,130 7,518,061 7,012,848
Stockholders’ deficit (4,349,894) (3,538,913) (1,797,536) (877,977) (1,713,851) (1,520,355)
Net deferred tax (assets) liabilities2 450,276 481,836 296,082 326,343 285,119 250,584
Allowance for credit losses3 7,700 9,500 11,400 10,000 8,500 6,100
LIFO reserve4 (59,000) (15,000) (335,300) (357,000) (404,900) (452,400)
Accrued sales and warranty returns5 43,355 35,696 32,418 32,356 34,310 20,025
Equity equivalents6 442,331 512,032 4,600 11,699 (76,971) (175,691)
Accumulated other comprehensive (income) loss, net of tax7 190,836 300,536 307,986 354,252 269,322 235,805
Adjusted stockholders’ deficit (3,716,727) (2,726,345) (1,484,950) (512,026) (1,521,500) (1,460,241)
Construction in progress8 (305,896) (291,588) (216,685) (165,953) (126,868) (140,535)
Marketable debt securities9 (121,513) (112,545) (113,918) (147,239) (138,926) (134,676)
Invested capital 6,986,333 6,383,299 6,599,731 7,636,912 5,730,767 5,277,396

Based on: 10-K (reporting date: 2023-08-26), 10-K (reporting date: 2022-08-27), 10-K (reporting date: 2021-08-28), 10-K (reporting date: 2020-08-29), 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-25).

1 Addition of capitalized operating leases.

2 Elimination of deferred taxes from assets and liabilities. See details »

3 Addition of allowance for doubtful accounts receivable.

4 Addition of LIFO reserve. See details »

5 Addition of accrued sales and warranty returns.

6 Addition of equity equivalents to stockholders’ deficit.

7 Removal of accumulated other comprehensive income.

8 Subtraction of construction in progress.

9 Subtraction of marketable debt securities.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. AutoZone Inc. invested capital decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.

Cost of Capital

AutoZone Inc., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 42,732,687 42,732,687 ÷ 53,456,507 = 0.80 0.80 × 11.06% = 8.84%
Long-term debt and finance lease liabilities3 7,549,518 7,549,518 ÷ 53,456,507 = 0.14 0.14 × 4.21% × (1 – 21.00%) = 0.47%
Operating lease liability4 3,174,302 3,174,302 ÷ 53,456,507 = 0.06 0.06 × 3.90% × (1 – 21.00%) = 0.18%
Total: 53,456,507 1.00 9.49%

Based on: 10-K (reporting date: 2023-08-26).

1 US$ in thousands

2 Equity. See details »

3 Long-term debt and finance lease liabilities. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 45,698,163 45,698,163 ÷ 55,029,148 = 0.83 0.83 × 11.06% = 9.18%
Long-term debt and finance lease liabilities3 6,249,605 6,249,605 ÷ 55,029,148 = 0.11 0.11 × 3.52% × (1 – 21.00%) = 0.32%
Operating lease liability4 3,081,380 3,081,380 ÷ 55,029,148 = 0.06 0.06 × 3.57% × (1 – 21.00%) = 0.16%
Total: 55,029,148 1.00 9.66%

Based on: 10-K (reporting date: 2022-08-27).

1 US$ in thousands

2 Equity. See details »

3 Long-term debt and finance lease liabilities. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 38,184,546 38,184,546 ÷ 47,012,910 = 0.81 0.81 × 11.06% = 8.98%
Long-term debt and finance lease liabilities3 5,958,954 5,958,954 ÷ 47,012,910 = 0.13 0.13 × 3.50% × (1 – 21.00%) = 0.35%
Operating lease liability4 2,869,410 2,869,410 ÷ 47,012,910 = 0.06 0.06 × 3.44% × (1 – 21.00%) = 0.17%
Total: 47,012,910 1.00 9.50%

Based on: 10-K (reporting date: 2021-08-28).

1 US$ in thousands

2 Equity. See details »

3 Long-term debt and finance lease liabilities. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 26,698,238 26,698,238 ÷ 35,727,897 = 0.75 0.75 × 11.06% = 8.26%
Long-term debt and finance lease liabilities3 6,304,253 6,304,253 ÷ 35,727,897 = 0.18 0.18 × 3.45% × (1 – 21.00%) = 0.48%
Operating lease liability4 2,725,406 2,725,406 ÷ 35,727,897 = 0.08 0.08 × 3.46% × (1 – 21.00%) = 0.21%
Total: 35,727,897 1.00 8.95%

Based on: 10-K (reporting date: 2020-08-29).

1 US$ in thousands

2 Equity. See details »

3 Long-term debt and finance lease liabilities. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 27,396,140 27,396,140 ÷ 35,126,857 = 0.78 0.78 × 11.06% = 8.62%
Long-term debt and finance lease liabilities3 5,598,905 5,598,905 ÷ 35,126,857 = 0.16 0.16 × 3.24% × (1 – 21.00%) = 0.41%
Operating lease liability4 2,131,812 2,131,812 ÷ 35,126,857 = 0.06 0.06 × 0.67% × (1 – 21.00%) = 0.03%
Total: 35,126,857 1.00 9.06%

Based on: 10-K (reporting date: 2019-08-31).

1 US$ in thousands

2 Equity. See details »

3 Long-term debt and finance lease liabilities. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 18,612,832 18,612,832 ÷ 25,568,150 = 0.73 0.73 × 11.06% = 8.05%
Long-term debt and finance lease liabilities3 5,102,703 5,102,703 ÷ 25,568,150 = 0.20 0.20 × 3.15% × (1 – 25.90%) = 0.47%
Operating lease liability4 1,852,615 1,852,615 ÷ 25,568,150 = 0.07 0.07 × 3.27% × (1 – 25.90%) = 0.18%
Total: 25,568,150 1.00 8.69%

Based on: 10-K (reporting date: 2018-08-25).

1 US$ in thousands

2 Equity. See details »

3 Long-term debt and finance lease liabilities. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

AutoZone Inc., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel
Aug 26, 2023 Aug 27, 2022 Aug 28, 2021 Aug 29, 2020 Aug 31, 2019 Aug 25, 2018
Selected Financial Data (US$ in thousands)
Economic profit1 2,141,218 2,558,846 1,764,695 1,381,404 1,354,320 892,038
Invested capital2 6,986,333 6,383,299 6,599,731 7,636,912 5,730,767 5,277,396
Performance Ratio
Economic spread ratio3 30.65% 40.09% 26.74% 18.09% 23.63% 16.90%
Benchmarks
Economic Spread Ratio, Competitors4
Amazon.com Inc. -4.21% -15.48% 4.60% 1.97% -1.38%
Home Depot Inc. 21.05% 25.55% 16.37% 23.46% 23.90%
Lowe’s Cos. Inc. 16.54% 24.76% 12.26% 8.35% -1.15%
TJX Cos. Inc. 7.48% 7.41% -9.52% 8.19% 7.46% 5.69%

Based on: 10-K (reporting date: 2023-08-26), 10-K (reporting date: 2022-08-27), 10-K (reporting date: 2021-08-28), 10-K (reporting date: 2020-08-29), 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-25).

1 Economic profit. See details »

2 Invested capital. See details »

3 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 2,141,218 ÷ 6,986,333 = 30.65%

4 Click competitor name to see calculations.

Performance ratio Description The company
Economic spread ratio The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital. AutoZone Inc. economic spread ratio improved from 2021 to 2022 but then slightly deteriorated from 2022 to 2023 not reaching 2021 level.

Economic Profit Margin

AutoZone Inc., economic profit margin calculation, comparison to benchmarks

Microsoft Excel
Aug 26, 2023 Aug 27, 2022 Aug 28, 2021 Aug 29, 2020 Aug 31, 2019 Aug 25, 2018
Selected Financial Data (US$ in thousands)
Economic profit1 2,141,218 2,558,846 1,764,695 1,381,404 1,354,320 892,038
Net sales 17,457,209 16,252,230 14,629,585 12,631,967 11,863,743 11,221,077
Performance Ratio
Economic profit margin2 12.27% 15.74% 12.06% 10.94% 11.42% 7.95%
Benchmarks
Economic Profit Margin, Competitors3
Amazon.com Inc. -2.37% -8.08% 1.98% 0.76% -0.62%
Home Depot Inc. 7.40% 8.12% 6.16% 7.78% 7.55%
Lowe’s Cos. Inc. 4.22% 6.74% 3.88% 3.09% -0.40%
TJX Cos. Inc. 3.05% 3.01% -6.63% 3.67% 3.33% 2.57%

Based on: 10-K (reporting date: 2023-08-26), 10-K (reporting date: 2022-08-27), 10-K (reporting date: 2021-08-28), 10-K (reporting date: 2020-08-29), 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-25).

1 Economic profit. See details »

2 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Net sales
= 100 × 2,141,218 ÷ 17,457,209 = 12.27%

3 Click competitor name to see calculations.

Performance ratio Description The company
Economic profit margin The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin. AutoZone Inc. economic profit margin improved from 2021 to 2022 but then slightly deteriorated from 2022 to 2023 not reaching 2021 level.