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AutoZone (AZO) Earnings Surpass Estimates in Q3, Up Y/Y

Zacks Equity Research

AutoZone, Inc. AZO has reported earnings of $15.99 per share in the third quarter of fiscal 2019 (ended May 4, 2019), up from $13.42 in the prior-year quarter. Further, the figure surpassed the Zacks Consensus Estimate of $15.23. Net income rose 10.7% year over year to $405.9 million, which benefitted from lower effective income tax rate.

In the reported quarter, net sales improved 4.6% year over year to $2.78 billion. Domestic same-store sales (sales for stores open at least for a year) rose 3.9% year over year, driven by the AutoZone’s improved performances of DIY and commercial businesses.

Gross profit increased to $1.49 billion from $1.42 billion in the prior-year quarter. Operating profit (EBIT) rose to $547.5 million from $545.8 million registered in the third quarter of fiscal 2018.

AutoZone, Inc. Price, Consensus and EPS Surprise


AutoZone, Inc. Price, Consensus and EPS Surprise

AutoZone, Inc. price-consensus-eps-surprise-chart | AutoZone, Inc. Quote


Store Opening & Inventory

During the quarter ended on May 4, 2019, AutoZone opened 35 stores in the United States, eight in Mexico and three in Brazil. As of the date, it had 5,686 stores across 50 states in the United States, the District of Columbia and Puerto Rico; 576 in Mexico; and 25 in Brazil. The total store count was 6,287 as of May 4.

AutoZone’s inventory improved 8% year over year in the quarter under review, driven by store openings and increased product placement. At the end of the quarter, inventory per location increased to $688,000 from the year-ago figure of $658,000.

Share Repurchases

In the third quarter of fiscal 2019, AutoZone repurchased 472,000 shares for $466 million, reflecting average price of $987 per share. The company had shares worth $1.169 billion remaining for repurchase in its current repurchase authorization.

Financial Details

AutoZone had cash and cash equivalents of $174 million as of May 4, 2019, down from $218 million as of May 5, 2018. Total debt amounted to $5.2 billion as of May 4, 2019, marking a slight increase from $5 billion recorded on May 5, 2018.

Zacks Rank & Other Key Picks

AutoZone currently carries a Zacks Rank #2 (Buy). A few other top-ranked stocks in the broader auto sector are LCI Industries LCII, Gentex Corporation GNTX and AB Volvo VLVLY. LCI and Gentex currently carry a Zacks Rank of 2 while Volvo sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

LCI Industries has an expected long-term growth rate of 16%. The stock has gained 3.2% in the past three months.

Gentex has an expected long-term growth rate of 6%. The stock has gained 9.4% in the past three months.

Volvo has an expected long-term growth rate of 5%. Over the past six months, shares of the company have gained 3.3%.

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