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AutoZone (AZO) Q2 Earnings Surpass Estimates, Increases Y/Y

Zacks Equity Research
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AutoZone, Inc. AZO has reported earnings of $11.49 per share in the second quarter of fiscal 2019 (ended Feb 9, 2019), up from $10.38 in the prior-year quarter. The Zacks Consensus Estimate was $9.97. Net income rose 1.8% year over year to $294.6 million.

Net sales improved 1.6% year over year to $2.45 billion in the reported quarter. The figure was in line with the Zacks Consensus Estimate. Domestic same-store sales (sales of stores open at least for a year) rose 2.6% year over year. This rise in revenues was due to the company’s improved performances of DIY and commercial businesses, which increased for the fourth consecutive quarter.

Gross profit increased to $1.33 billion from $1.28 billion in the prior-year quarter. Operating profit (EBIT) rose to $400 million from $205.1 million registered in the second quarter of fiscal 2018.

Store Opening & Inventory

During the quarter ended on Feb 9, 2019, AutoZone opened 20 stores in the United States, one in Mexico and two in Brazil. As of Feb 9, it had 5,651 stores across 50 states in the United States, the District of Columbia and Puerto Rico; 568 in Mexico; and 22 in Brazil. The total store count was 6,241 as of that date.

AutoZone’s inventory improved 5.4% year over year in the quarter under review, driven by store openings and increased product placement, partially offset by the sale of two business units in the prior year. At the end of the second quarter of fiscal 2019, inventory per location increased to $690,000 from the year-ago figure of $671,000.

Share Repurchases

In the second quarter of fiscal 2019, AutoZone repurchased 422,000 shares for $350 million, reflecting average price of $830 per share. The company had shares worth $635 million remaining for repurchase in its current repurchase authorization.

Financial Details

AutoZone had cash and cash equivalents of $195.7 million as of Feb 9, 2019, down from $288.5 million as of Feb 10, 2018. Total debt amounted to $5.1 billion as of Feb 9, 2019, marking a slight increase from $5 billion recorded on Feb 10, 2018.

Zacks Rank & Stocks to Consider

AutoZone currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the auto space are Oshkosh Corporation OSK, General Motors Company GM and Honda Motor Co., Ltd. HMC. While Oshkosh currently sports a Zacks Rank #1 (Strong Buy), both General Motors and Honda Motor carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Oshkosh has an expected growth rate of 11.3%. The company’s stock has seen the Zacks Consensus Estimate for earnings in fiscal 2019 being revised 5.8% upward over the past 30 days.

General Motors has an expected long-term growth rate of 8.5%. The company’s stock has seen the Zacks Consensus Estimate for earnings in 2019 being revised 3.7% upward over the past 30 days.

Honda has an expected long-term growth rate of 2.9%. The company’s stock has seen the Zacks Consensus Estimate for earnings in fiscal 2019 being revised 4.3% upward over the past 30 days.

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