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AutoZone (AZO) Up 5.1% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for AutoZone (AZO). Shares have added about 5.1% 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 Q4 Earnings & Sales Beat Estimates

AutoZone reported earnings of $35.72 per share for fourth-quarter fiscal 2021 (ended Aug 28, 2021), up from the prior-year figure of $30.93. The bottom line also surpassed the Zacks Consensus Estimate of $30.20. Robust comparable sales growth led to this outperformance.

Net income increased 6.1% year over year to $785.8 million. Net sales grew 8.1% year over year to $4,913.5 million. The top line, moreover, topped the Zacks Consensus Estimate of $4,538 million.

For the reported quarter, domestic commercial sales totaled $1,182.6 million, up from $975.5 million recorded in the year-ago period. In addition, domestic same-store sales (sales at stores open at least for a year) rose 4.3% year over year versus the Zacks Consensus Estimate of a decline of 1.02%.

Gross profit increased to $2,567.8 million from the prior-year quarter’s $2,412.9 million. Operating profit moved up to $1,044 million from $1,018 million registered in the year-earlier period.

Store Opening & Inventory

During the fiscal fourth quarter, AutoZone opened 76 stores in the United States, 29 in Mexico and five in Brazil. It exited the quarter with 6,051 stores in the United States, 664 in Mexico and 52 in Brazil. The total store count was 6,767 as of Aug 28, 2021.

AutoZone’s inventory improved 3.7% year over year for the reported quarter on store openings and better product assortment. At quarter-end, inventory per location was $686,000, up from the year-ago figure of $683,000.

Financials and Share Repurchases

AutoZone had cash and cash equivalents of $1,171.3 million as of Aug 28, 2021, down from $1,750.8 million on Aug 29, 2020. Total debt amounted to $5,269.8 million as of Aug 28, 2021, marking a decrease from $5,513.3 million on Aug 29, 2020.

In the fiscal fourth quarter, it repurchased 592,000 shares for $900 million at an average price of $1,519 per share. The company has shares worth $417.6 remaining in the current repurchase authorization.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

VGM Scores

At this time, AutoZone has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise AutoZone has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.


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