Post Earnings Coverage as AutoZone Delivers 41st Consecutive Quarter of Double Digit EPS Growth
Upcoming AWS Coverage on Advance Auto Parts Post-Earnings Results
LONDON, UK / ACCESSWIRE / December 9, 2016 / Active Wall St. announces its post-earnings coverage on AutoZone, Inc. (NYSE: AZO). The Company posted its first quarter fiscal 2017 (Q1 FY17) earnings on December 06, 2016. The auto parts retailer's earnings outperformed market expectations. Register with us now for your free membership at: http://www.activewallst.com/register/.
One of AutoZone's competitors within the Auto Parts Stores space, Advance Auto Parts, Inc. (NYSE: AAP), reported on November 14, 2016, its financial results for the third quarter ended October 8, 2016. AWS will be initiating a research report on Advance Auto Parts in the coming days.
Today, AWS is promoting its earnings coverage on AZO; touching on AAP. Get our free coverage by signing up to:
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Earnings Reviewed
For the quarter ended on November 19, 2016, AutoZone reported net sales of $2.5 billion, an increase of 3.4% from Q1 FY16. The company's domestic same store sales, or sales for stores open at least one year, increased 1.6% for the reported quarter, yet was still below market estimates of 2.1% growth. AutoZone's total commercial sales increased 6.3% in Q1 FY17. In the reported quarter, commercial represented 19% of company's total sales and grew $27 million over Q1 FY16. During Q1 FY17 AutoZone opened 35 net new programs versus 55 programs opened in the year ago comparable quarter. The company stated that it now has commercial program in 4,425 stores, or 83% of our domestic stores, supported by 182 hub stores. In 2017, AutoZone is expecting to open approximately 200 new programs.
AutoZone's net income for Q1 FY17 increased 7.8% over the same period last year to $278.1 million, while diluted earnings per share increased 13.0% to $9.36 per share from $8.29 per share in the year-ago quarter, easily surpassing Wall Street's expectations for earnings of $9.31 per share.
Margin Matters
For Q1 FY17, AutoZone's gross profit, as a percentage of sales, was 52.7% (versus 52.5% for the same period last year). The improvement in gross margin was attributed to lower acquisition costs, partially offset by higher supply chain costs associated with the current year's inventory initiatives. Operating expenses, as a percentage of sales, were 34.1% compared to 34.2% the same period last year.
Balance Sheet
Under its share repurchase program, AutoZone repurchased 478,000 shares of its common stock for $363 million, during Q1 FY17, at an average price of $759 per share. At the end of the reported quarter, the Company had $783 million remaining under its current share repurchase authorization.
The Company's inventory increased 7.3% over the same period of last year driven by new stores and increased product placement. AutoZone's Q1 FY17 inventory per location was $647,000 compared to $624,000 in Q1 FY16. The company's net inventory, defined as merchandise inventories less accounts payable, on a per location basis, was a negative $67,000 versus negative $66,000 in the year earlier same quarter.
In Q1 FY17, AutoZone generated $407 million of operating cash flow. Net fixed assets were up 6% versus Q1 FY16. The company's capital expenditures for Q1 FY17 totaled $98 million and reflected the additional expenditures required to open 23 new locations in the reported quarter, capital expenditures on existing stores, hub and Mega Hub store remodels and openings, work on development of new stores for upcoming quarters, development of its New Mexico DC, and some minor investments in the company's new domestic DC's and information technology investments. Accounts payable as a percentage of gross inventory finished Q1 FY17 at 110.3%.
Store Update
During the quarter ended November 19, 2016, AutoZone opened 16 new stores and relocated two stores in the US, and opened five new stores in Mexico. As of November 19, 2016, the Company had 5,313 stores in 50 states in the US, the District of Columbia, and Puerto Rico, 488 stores in Mexico, 26 IMC branches, and 8 stores in Brazil for a total count of 5,835.
Stock Performance
On Thursday, on December 08th, 2016, the stock closed the trading session at $807.71, slightly down 0.27% from its previous closing price of $809.87. A total volume of 330.12 thousand shares have exchanged hands. AutoZone's stock price advanced 10.36% in the last month, 11.80% in the past three months, and 7.10% in the previous six months. Furthermore, on a year to date basis, the stock gained 8.87%. Shares of the company have a PE ratio of 19.75.
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