In a
recent study of analyst recommendations at the major brokerages,
AutoZone, Inc. (NYSE: AZO) is shown to be ranked the #76 broker
analyst pick among those stocks screened by The Online Investor for
strong stock buyback activity. To make that list, a stock must have
repurchased at least 5% of its outstanding shares over the trailing
twelve month period. In forming the rank, the analyst opinions from
the major brokerage houses were tallied, and averaged; then, the list
of stocks with strong buyback activity was ranked according to those
averages.
Thus,
AutoZone, Inc. is a company with strong buyback activity that is also
considered a compelling buy by analysts; a bullish investor could
take this to mean that sharp analyst minds came to the same bullish
conclusion as the company itself that the stock is a good value, and
therefore the stock should do well in the future.
Through
the story of Pitt Hyde himself, we can glean AutoZone's disciplined
path to success. Pitt Hyde's grandfather started Malone & Hyde, a
wholesale food distributor, in 1907. “He ran it, my father ran it,
and I ran it.”
From the
time Pitt Hyde was 4 or 5, “my grandfather would take me to visit
the stores, and my father always discussed the big decisions being
made with me.” It seemed that his future was cut out for him: “ I
was always told that I had the opportunity to run Malone & Hyde,
and the obligation to do it better than my grandfather and father
did. I never knew I had a choice.”
His first
job, “when I was 14 or 15 years old, was bagging groceries and
carrying them out to cars at one of our stores. After I graduated
from the University of North Carolina with an economics degree, my
father grew ill. So in 1968, at 26, I had to take over. That year, we
had $240 million in sales. Fortunately, I was able to continue to
grow the company.”
Then in
the mid-1970's, he looked for areas to diversify into. “We had a
successful drug chain called Super D and felt comfortable with
specialty retailing. So when this small company, Checker Auto Parts
in Phoenix, came up for sale, I checked it out. I saw how it was
growing with auto parts geared to the do-it-yourself market. We
passed,” and another company bought it. Still, he continued to
study the situation: “I could see the auto parts business was
growing rapidly and wasn't as price-sensitive as food. I didn't see
anyone doing a superior job of customer service, and most were not
well kept, so we decided to start a company from scratch.”
They
opened “our first store in Forrest City, Ark., on July 4, 1979, and
called it Auto Shack” However, there was a complaint filed by Radio
Shack for trademark infringement. In short, instead of fighting it,
“we changed the name to AutoZone.”
Then in
1988, “we sold Malone & Hyde, which by then had $3.3 billion in
sales. We had set up AutoZone in its own corporate structure, so when
we sold the base business, I kept AutoZone.”
Pitt Hyde
was not really into “do-it-yourself” and did not know about the
auto parts business, “but I knew there was an opportunity. We
worked on small margins and were very tight operators, so that
discipline helped us through as we learned the business.”
Starting
with four stores, and with an electronic catalogue to boot, AutoZone
was well on its way to success as it worked within its objective of
building “a culture around superior customer service, and to have
everyday low prices in good-looking stores. In 1991 we went public,
and the competition saw how well we were doing. They started copying
our store layout and pricing. But none of them could copy our
culture. Today we have 5,000 stores.”
According
to the ETF Finder at ETF Channel, AZO makes up 2.76% of the Retail
ETF (RTH) which is trading higher by about 0.4% on the day Friday.
Pitt
Hyde's parting words sum it all: “Money is a small part of the
equation for success. Sweat equity is what makes things work.”
Sources:
1 comment:
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