Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
AutoZone Inc., profitability ratios
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).
Over the analyzed periods, several key profitability ratios demonstrate both stability and fluctuations reflective of operational and market conditions.
- Gross Profit Margin
- The gross profit margin showed a general decreasing trend, starting at 53.24% in 2018 and declining incrementally each year to 51.96% by 2023. This gradual reduction indicates slightly increasing costs of goods sold relative to revenue, which may reflect higher input costs or pricing pressures.
- Operating Profit Margin
- The operating profit margin displayed a notable upward trend from 16.14% in 2018, peaking at 20.13% in 2021. After that, it slightly decreased but remained strong at 19.90% in 2023. This improvement over time suggests enhanced operational efficiency or cost control measures, helping to partially offset the downward pressure observed in gross margins.
- Net Profit Margin
- The net profit margin followed a similar increasing trend, starting at 11.92% in 2018 and rising steadily to 14.95% in 2022, with a modest decline to 14.48% in the most recent year. The rising net margin indicates improved bottom-line profitability, potentially due to better expense management, tax considerations, or favorable financing conditions.
- Return on Assets (ROA)
- The return on assets ratio exhibited some volatility, increasing from 14.31% in 2018 to a peak of 16.34% in 2019, followed by a significant drop to 12.01% in 2020. Subsequently, ROA recovered and increased steadily to 15.82% by 2023. This pattern may reflect changes in asset utilization efficiency, possibly impacted by capital investments, asset dispositions, or variations in net income.
- Return on Equity (ROE)
- No data was provided for return on equity, preventing analysis of shareholder returns or leverage effects during the period.
In summary, the company maintained relatively stable gross margins with a slight decline, while improving operational and net profitability margins over the years. Return on assets fluctuated but showed a recovery trend in recent years. The lack of data for return on equity limits a full assessment of financial efficiency from the shareholders' perspective.
Return on Sales
Return on Investment
Gross Profit Margin
AutoZone Inc., gross profit margin calculation, comparison to benchmarks
| Aug 26, 2023 | Aug 27, 2022 | Aug 28, 2021 | Aug 29, 2020 | Aug 31, 2019 | Aug 25, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Gross profit | 9,070,422) | 8,472,650) | 7,717,785) | 6,770,753) | 6,365,001) | 5,973,746) | |
| Net sales | 17,457,209) | 16,252,230) | 14,629,585) | 12,631,967) | 11,863,743) | 11,221,077) | |
| Profitability Ratio | |||||||
| Gross profit margin1 | 51.96% | 52.13% | 52.75% | 53.60% | 53.65% | 53.24% | |
| Benchmarks | |||||||
| Gross Profit Margin, Competitors2 | |||||||
| Amazon.com Inc. | 46.98% | 43.81% | 42.03% | 39.57% | — | — | |
| Home Depot Inc. | 33.53% | 33.63% | 33.95% | 34.09% | — | — | |
| Lowe’s Cos. Inc. | 33.23% | 33.30% | 33.01% | 31.80% | — | — | |
| TJX Cos. Inc. | 27.61% | 28.50% | 23.66% | 28.46% | — | — | |
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 2023 Calculation
Gross profit margin = 100 × Gross profit ÷ Net sales
= 100 × 9,070,422 ÷ 17,457,209 = 51.96%
2 Click competitor name to see calculations.
- Gross Profit
- The gross profit has demonstrated a consistent upward trend over the observed periods. Starting at approximately $5.97 billion in 2018, it steadily increased each year, reaching about $9.07 billion by 2023. This indicates a positive development in the company's ability to generate profit from its sales revenue over the six-year span.
- Net Sales
- Net sales showed a continuous rise throughout the period, starting from approximately $11.22 billion in 2018 and growing to around $17.46 billion in 2023. This suggests sustained growth in the company's revenue generation capabilities and market demand for its products or services.
- Gross Profit Margin
- The gross profit margin exhibited a slight downward trend over the years. Beginning at 53.24% in 2018, it peaked marginally to 53.65% in 2019 and then gradually declined each year, reaching 51.96% by 2023. Despite overall growth in gross profit and net sales, this decline indicates a reduction in profitability relative to sales, potentially due to increased costs or pricing pressures.
Operating Profit Margin
AutoZone Inc., operating profit margin calculation, comparison to benchmarks
| Aug 26, 2023 | Aug 27, 2022 | Aug 28, 2021 | Aug 29, 2020 | Aug 31, 2019 | Aug 25, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Operating profit | 3,473,986) | 3,270,729) | 2,944,527) | 2,417,679) | 2,216,137) | 1,810,856) | |
| Net sales | 17,457,209) | 16,252,230) | 14,629,585) | 12,631,967) | 11,863,743) | 11,221,077) | |
| Profitability Ratio | |||||||
| Operating profit margin1 | 19.90% | 20.12% | 20.13% | 19.14% | 18.68% | 16.14% | |
| Benchmarks | |||||||
| Operating Profit Margin, Competitors2 | |||||||
| Amazon.com Inc. | 6.41% | 2.38% | 5.30% | 5.93% | — | — | |
| Home Depot Inc. | 15.27% | 15.24% | 13.84% | 14.37% | — | — | |
| Lowe’s Cos. Inc. | 10.47% | 12.56% | 10.77% | 8.75% | — | — | |
| TJX Cos. Inc. | 9.73% | 9.79% | 1.81% | 10.59% | — | — | |
| Operating Profit Margin, Sector | |||||||
| Consumer Discretionary Distribution & Retail | 8.63% | 6.44% | 7.38% | 8.11% | — | — | |
| Operating Profit Margin, Industry | |||||||
| Consumer Discretionary | 9.12% | 8.47% | 8.79% | 6.48% | — | — | |
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 2023 Calculation
Operating profit margin = 100 × Operating profit ÷ Net sales
= 100 × 3,473,986 ÷ 17,457,209 = 19.90%
2 Click competitor name to see calculations.
- Net Sales
- Net sales show a consistent upward trend over the six-year period, increasing from approximately $11.2 billion in 2018 to $17.46 billion in 2023. This reflects steady growth in revenue generation year over year, with the most significant annual increases observed between 2020 to 2021 and 2021 to 2022.
- Operating Profit
- Operating profit also demonstrates a continuous growth trajectory, rising from about $1.81 billion in 2018 to $3.47 billion in 2023. This increase aligns with the growth in net sales, indicating improved profitability in absolute terms. The year-over-year growth appears robust, especially notable in the periods from 2019 to 2021.
- Operating Profit Margin
- The operating profit margin, expressed as a percentage, showed an improvement from 16.14% in 2018 to a peak of 20.13% in 2021, indicating enhanced operational efficiency and profitability relative to sales. However, there is a slight decline in the margin from 20.13% in 2021 to 19.9% in 2023, suggesting some pressure on profitability despite growing sales and operating profit figures.
- Overall Analysis
- Overall, the data reflects strong growth in both net sales and operating profit over the six-year timeframe, indicating successful business expansion and increasing earnings. The operating profit margin improvements up to 2021 highlight increasing operational efficiency, though the slight margin decline in the last two years suggests emerging challenges in maintaining peak profitability levels.
Net Profit Margin
AutoZone Inc., net profit margin calculation, comparison to benchmarks
| Aug 26, 2023 | Aug 27, 2022 | Aug 28, 2021 | Aug 29, 2020 | Aug 31, 2019 | Aug 25, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net income | 2,528,426) | 2,429,604) | 2,170,314) | 1,732,972) | 1,617,221) | 1,337,536) | |
| Net sales | 17,457,209) | 16,252,230) | 14,629,585) | 12,631,967) | 11,863,743) | 11,221,077) | |
| Profitability Ratio | |||||||
| Net profit margin1 | 14.48% | 14.95% | 14.84% | 13.72% | 13.63% | 11.92% | |
| Benchmarks | |||||||
| Net Profit Margin, Competitors2 | |||||||
| Amazon.com Inc. | 5.29% | -0.53% | 7.10% | 5.53% | — | — | |
| Home Depot Inc. | 10.87% | 10.87% | 9.74% | 10.20% | — | — | |
| Lowe’s Cos. Inc. | 6.63% | 8.77% | 6.51% | 5.93% | — | — | |
| TJX Cos. Inc. | 7.00% | 6.76% | 0.28% | 7.84% | — | — | |
| Net Profit Margin, Sector | |||||||
| Consumer Discretionary Distribution & Retail | 6.54% | 3.14% | 7.21% | 6.58% | — | — | |
| Net Profit Margin, Industry | |||||||
| Consumer Discretionary | 7.92% | 5.15% | 9.20% | 5.24% | — | — | |
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 2023 Calculation
Net profit margin = 100 × Net income ÷ Net sales
= 100 × 2,528,426 ÷ 17,457,209 = 14.48%
2 Click competitor name to see calculations.
- Net Income
- The net income shows a consistent upward trend over the six periods analyzed. It increased from 1,337,536 thousand US dollars in August 2018 to 2,528,426 thousand US dollars in August 2023. This represents a substantial overall growth, with only minor deceleration in the increase rate towards the most recent year.
- Net Sales
- Net sales also display a steady growth pattern, rising from 11,221,077 thousand US dollars in August 2018 to 17,457,209 thousand US dollars by August 2023. The growth rate remains positive and relatively stable, indicating consistent revenue expansion over the period.
- Net Profit Margin
- The net profit margin has generally improved from 11.92% in August 2018 to a peak of 14.95% in August 2022, followed by a slight decline to 14.48% in August 2023. This suggests an overall enhancement in profitability efficiency, although the recent slight decrease may warrant monitoring to determine if it reflects a short-term fluctuation or a developing trend.
Return on Equity (ROE)
AutoZone Inc., ROE calculation, comparison to benchmarks
| Aug 26, 2023 | Aug 27, 2022 | Aug 28, 2021 | Aug 29, 2020 | Aug 31, 2019 | Aug 25, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net income | 2,528,426) | 2,429,604) | 2,170,314) | 1,732,972) | 1,617,221) | 1,337,536) | |
| Stockholders’ deficit | (4,349,894) | (3,538,913) | (1,797,536) | (877,977) | (1,713,851) | (1,520,355) | |
| Profitability Ratio | |||||||
| ROE1 | — | — | — | — | — | — | |
| Benchmarks | |||||||
| ROE, Competitors2 | |||||||
| Amazon.com Inc. | 15.07% | -1.86% | 24.13% | 22.84% | — | — | |
| Home Depot Inc. | 1,095.07% | — | 390.00% | — | — | — | |
| Lowe’s Cos. Inc. | — | — | 406.05% | 217.09% | — | — | |
| TJX Cos. Inc. | 54.97% | 54.69% | 1.55% | 55.01% | — | — | |
| ROE, Sector | |||||||
| Consumer Discretionary Distribution & Retail | 29.39% | 17.48% | 35.05% | 40.86% | — | — | |
| ROE, Industry | |||||||
| Consumer Discretionary | 30.61% | 21.65% | 34.37% | 25.29% | — | — | |
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 2023 Calculation
ROE = 100 × Net income ÷ Stockholders’ deficit
= 100 × 2,528,426 ÷ -4,349,894 = —
2 Click competitor name to see calculations.
- Net Income Trend
- The net income of the company has shown a consistent upward trend over the six-year period. Starting at approximately $1.34 billion in 2018, net income increased each year, reaching about $2.53 billion by 2023. This steady growth indicates improving profitability and effective management of operations or revenue expansion.
- Stockholders' Deficit Trend
- Stockholders' deficit has fluctuated significantly during the same period. In 2018, the deficit was roughly -$1.52 billion. It deepened to about -$1.71 billion in 2019, then sharply improved to around -$878 million in 2020. However, the deficit worsened again in 2021 and continued to increase through 2022 and 2023, reaching approximately -$4.35 billion. This pattern suggests volatility in equity or liabilities management, possibly due to factors such as share repurchases, increased debt levels, or losses in other comprehensive income.
- Return on Equity (ROE)
- Data for Return on Equity (ROE) are not provided, thus no direct assessment can be made. However, given the substantial and increasing stockholders' deficit alongside rising net income, ROE may be impacted or difficult to interpret without further information on equity or total capital structure.
- Overall Insights
- The positive trajectory in net income indicates strengthening operational performance or revenue growth. Conversely, the worsening stockholders’ deficit in recent years raises concerns regarding the company’s equity position and financial structure stability. The contrasting movement between profitability and equity position suggests a deeper investigation into balance sheet components, financing strategies, and potential external factors affecting equity is warranted for a comprehensive evaluation.
Return on Assets (ROA)
AutoZone Inc., ROA calculation, comparison to benchmarks
| Aug 26, 2023 | Aug 27, 2022 | Aug 28, 2021 | Aug 29, 2020 | Aug 31, 2019 | Aug 25, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net income | 2,528,426) | 2,429,604) | 2,170,314) | 1,732,972) | 1,617,221) | 1,337,536) | |
| Total assets | 15,985,878) | 15,275,043) | 14,516,199) | 14,423,872) | 9,895,913) | 9,346,980) | |
| Profitability Ratio | |||||||
| ROA1 | 15.82% | 15.91% | 14.95% | 12.01% | 16.34% | 14.31% | |
| Benchmarks | |||||||
| ROA, Competitors2 | |||||||
| Amazon.com Inc. | 5.76% | -0.59% | 7.93% | 6.64% | — | — | |
| Home Depot Inc. | 22.38% | 22.86% | 18.23% | 21.94% | — | — | |
| Lowe’s Cos. Inc. | 14.73% | 18.91% | 12.49% | 10.85% | — | — | |
| TJX Cos. Inc. | 12.34% | 11.53% | 0.29% | 13.55% | — | — | |
| ROA, Sector | |||||||
| Consumer Discretionary Distribution & Retail | 8.50% | 4.19% | 9.17% | 9.20% | — | — | |
| ROA, Industry | |||||||
| Consumer Discretionary | 7.66% | 4.94% | 8.07% | 4.42% | — | — | |
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 2023 Calculation
ROA = 100 × Net income ÷ Total assets
= 100 × 2,528,426 ÷ 15,985,878 = 15.82%
2 Click competitor name to see calculations.
The financial data depicts a consistent upward trend in net income over the six-year period, increasing from approximately 1.34 billion US dollars in 2018 to roughly 2.53 billion US dollars in 2023. This growth indicates effective profitability improvements and operational efficiency enhancements over time.
Total assets have also shown a substantial increase, rising from about 9.35 billion US dollars in 2018 to nearly 16.0 billion US dollars in 2023. The asset base expansion suggests ongoing investments and possible scaling of business operations during these years.
Analyzing the Return on Assets (ROA) ratio, which measures how efficiently the assets generate profit, reveals some variability. The ROA started at 14.31% in 2018, peaked at 16.34% in 2019, then declined to 12.01% in 2020. Following this dip, it rebounded to 14.95% in 2021 and continued improving slightly to 15.91% in 2022, before marginally declining to 15.82% in 2023. Overall, ROA has remained relatively stable around the mid-teens percentage mark, reflecting a consistent asset utilization efficiency despite fluctuations.
In summary, the entity has demonstrated strong net income growth supported by a continuously expanding asset base, while maintaining a stable and relatively high ROA, indicative of effective management and investment strategies over the analyzed period.