20 Apr 2021

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Anthony Menard

Number Cruncher Extra – Clorox, Progressive & Autozone

20 Apr 2021

In our last Number Cruncher we discussed how Clorox (CLX)Progressive (PGR) Autozone (AZO) are companies with incredible adjusted profitabily adjusted for risk and valuation. Now, we will look at these with our software Stockpointer.

Let’s start with CLX

The company has a SP score of 78 which is explained by the performance (86.2) and risk (25.1) score. Last year momentum is easily observable in all key metrics such as sales, EPS and performance spread. The company managed to increase its earnings per share by almost 20% per year in the last 5-year period.

We see in this chart that the market potentially overreacted to the company’s short-term profitabily boost and that the share price fell since July. At the current level, the NOPAT continues to grow rapidly and the share price approach a more reasonable entry point.

 

Progressive has a SP score of 76 explained by its performance score (72.5) and risk score (14.6). The company offers as much as 3 factors exposure: quality, value and growth. PGR grew at a rapid rate of 16.3% per year in the last 5-year which helped to increase its earnings per share by 53.2% per year. This performance is possible due to the substantial increase in the performance spread.

 

We see that our system has been fairly close to the actual share price in the past. Currently, due to the short-term boost from the pandemic, the intrinsic value exploded, but the share price didn’t follow. Our system indicated a potential increase around January 2020 since the Intrinsic value was fairly higher than the share price. The stock currently trades around that price. We believe the stock could see a potential increase from this point even if we don’t consider the intrinsic value to be representative of the potential upside.

 

Autozone has a SP score of 77 explained by its performance score (76.3) and its risk score (19.3). The stock has a similar profile than Clorox, slower Sales growth (5-6%), but still maintain EPS growth at more than 15%. This stock is the only one of the three to have the “low risk” factor exposure. We’ll directly pass to the next graph to better visualize that.

 

The NOPAT increased each year in the past five years. In 2018, the performance spread decreased significantly, but it could be because of the Trump tax plan. We would need to look further on this. Otherwise, the large performance spread gives a huge margin of safety that it will add value to shareholders over time.

 

If you have any questions about the article, feel free to contact Anthony :
Amenard@Inovestor.com

If you would like to sign up for a free trial and learn how Inovestor can benefit you, contact Olivier:
Olamothe@Inovestor.com

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