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Retail Auto Parts AutoZone vs Advance Auto

Group 1 Darin Arnold Tracy Adams Jessica Nester Wesley Lucas Chad Toth. Retail Auto Parts AutoZone vs Advance Auto. September 12, 2005. Outline. Fidali Inc. Objective AutoZone Overview Advance Auto Overview Company Similarities Business Model Product Lines Differences Operating

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Retail Auto Parts AutoZone vs Advance Auto

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  1. Group 1 Darin Arnold Tracy Adams Jessica Nester Wesley Lucas Chad Toth Retail Auto PartsAutoZone vs Advance Auto September 12, 2005

  2. Outline • Fidali Inc. Objective • AutoZone Overview • Advance Auto Overview • Company Similarities • Business Model • Product Lines • Differences • Operating • Financing • Investing • Conclusions

  3. Fadali Inc. Objective • Fadali Inc. Investing $500,000 In Retail Auto Parts • Group 1 Was Hired By Fadali Inc. To Determine Better Investment • AutoZone Or Advance Auto • Group 1 Determined AutoZone To Be The Better Investment

  4. Reasons For Determination • Return On Equity • POS System And Its Impact On COGS • Growth • Goodwill

  5. AutoZone Overview • Founded 1979 • Stock AZO Debuted NYSE 1991 • Made Fortune 500 List 1999 • 2003 Partnership With Midas To Distribute To All US Locations

  6. Advance Auto Overview • Formed In 1929 Operated As General Merchandise Retailer Until 1980s During 1980s, Advance sharpened Focus To Automotive Parts And Accessories To DIY Customers. • Stock AAP Debuted NYSE 2001 • Listed Among Fortune 500 Companies

  7. Company Similarities • Customer Service Focus • Customer Base • Merchandise • Quick Delivery System For Hard To Find Parts • Location Standards / Criteria

  8. AutoZone Store Development For Past 5 Years

  9. AutoZone Stores Coverage 3578 Stores In 48 States, District Of Columbia And Mexico As Of May 7, 2005

  10. Advance Auto Store Development For Past 5 Years

  11. Advance Auto Parts Coverage 2708 Stores In 38 States, The US Virgin Islands And Puerto Rico As Of July 16, 2005

  12. Expected Store Growth • AutoZone Intends On Opening Approximately 200 New Stores In Fiscal 2005 • Advance Auto Intends On Opening Approximately 150-175 New Stores In Fiscal 2005

  13. Property Plant And Equipment

  14. AutoZone EPS Growth = 14% PE = 13.64 PEG = 0.97 Undervalued Treasury Stock 2004 Bought 10,194 Shares - Retired 12,400 2003 Bought 12,266 Shares - Retired 11,000 2002 Bought 12,591 Shares - Retired 12,000 Shares Advance Auto EPS Growth = 22% PE = 24.43 PEG = 1.11 Overvalued Treasury Stock 2004 Bought 3,700 Shares 2003 Zero 2002 Zero EPS Growth, PE, PEG Estimated Growth Rate Referenced From www.my.zacks.com

  15. Intangibles

  16. AutoZone Other Intangibles • Loan A Tool Program • AutoZone Positioning For Growth In Southwest And Mexico • Title Sponsor Of The NASCAR AutoZone Elite Division Series • AutoZone Sponsoring NASCAR Busch Series • Co-Sponsor Upcoming Series On Discover Channel Entitled DRIVER X : RACE FOR THE RIDE

  17. Cash Flow Coverage

  18. Inventory Turn

  19. Accounts Receivable

  20. Liquidity and Financial Flexibility

  21. Conclusions • AutoZone Is Better Investment • Better Positioning For Growth • Growth In SW And Mexico • POS System • AutoZone Is Better At Managing Assets • AutoZone Has Better Return On Assets • AutoZone Undervalued

  22. Questions?

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