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It has been about a month since the last earnings report for AutoZone (AZO). Shares have added about 19% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is AutoZone due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
AutoZone Q2 Earnings & Sales Beat Estimates
AutoZone reported earnings of $14.93 per share for the second quarter of fiscal 2021 (ended Feb 13, 2021), up from the prior-year figure of $12.39. The bottom line also surpassed the Zacks Consensus Estimate of $13.07. Higher-than-expected comparable sales growth led to this outperformance.
Net income climbed 15.6% year over year to $345.9 million. Net sales also increased 15.8% year over year to $2,910.8 million. The top line, moreover, topped the Zacks Consensus Estimate of $2,747 million.
For the reported quarter, domestic commercial sales totaled $638.9 million, up from the $556.9 million recorded in the year-ago period. The figure also beat the consensus mark of $616 million. In addition, domestic same-store sales (sales at stores open at least for a year) climbed 15.2% year over year, handily outpacing the Zacks Consensus Estimate of 6.6%.
Gross profit increased to $1,559.4 million from the prior-year quarter’s $1,366.1 million. Operating profit also surged to $481.8 million from the $407.9 million registered in the year-earlier period.
Store Opening & Inventory
During the fiscal second quarter, AutoZone opened 27 stores in the United States, and seven in Mexico and one in Brazil. It exited the quarter with 5,951 stores in the United States, 628 in Mexico and 46 in Brazil. Total store count was 6,625 as of Feb 13, 2021.
AutoZone’s inventory improved 2.8% year over year in the reported quarter on store openings and increased product placement. At the end of the quarter, inventory per location was $715,000, up from the year-ago figure of $713,000.
Financials and Share Repurchases
AutoZone had cash and cash equivalents of $1,026.2 million as of Feb 13, 2021, up from $153 million as of Feb 15, 2020. Total debt amounted to $5,516.4 million as of Feb 13, 2021, marking an increase from the $5,451.5 million on Feb 15, 2020.
For the fiscal second quarter, AutoZone repurchased 752,004 shares for $900 million at an average price of $1,197 per share. The company has shares worth $717.6 million remaining in the current repurchase authorization.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
At this time, AutoZone has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, AutoZone has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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