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Why Is AutoZone (AZO) Up 2.3% Since Last Earnings Report?

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A month has gone by since the last earnings report for AutoZone (AZO). Shares have added about 2.3% 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 the most recent earnings report in order to get a better handle on the important catalysts.

AutoZone Q3 Earnings & Sales Beat Estimates

AutoZone reported earnings of $26.48 per share for third-quarter fiscal 2021 (ended May 8, 2021), up from the prior-year figure of $14.39. The bottom line also surpassed the Zacks Consensus Estimate of $19.35. Robust comparable sales growth led to this outperformance.

Net income climbed 73.9% year over year to $596.2 million. Net sales also increased 31.4% year over year to $3,651 million. The top line, moreover, topped the Zacks Consensus Estimate of $3,176 million.

For the reported quarter, domestic commercial sales totaled $828.6 million, up from $573.8 million recorded in the year-ago period. In addition, domestic same-store sales (sales at stores open at least for a year) climbed 28.9% year over year.

Gross profit increased to $1,914.9 million from the prior-year quarter’s $1,490.6 million. Operating profit also surged to $803.5 million from $491.7 million registered in the year-earlier period.

Store Opening & Inventory

During the fiscal third quarter, AutoZone opened two stores in the United States, seven in Mexico and one in Brazil. It exited the quarter with 5,975 stores in the United States, 635 in Mexico and 47 in Brazil. Total store count was 6,657 as of May 8, 2021.

AutoZone’s inventory improved 5.1% year over year for the reported quarter on store openings and increased product placement. At quarter-end, inventory per location was $701,000, up from the year-ago figure of $685,000.

Financials and Share Repurchases

AutoZone had cash and cash equivalents of $975.6 million as of May 8, 2021, up from $509.1 million on May 9, 2020. Total debt amounted to $5,267.9 million as of May 8, 2021, marking a decrease from $5,418.3 million on May 9, 2020.

For the fiscal third quarter, AutoZone repurchased 663,328 shares for $900 million at an average price of $1,357 per share. The company has shares worth $1.3 billion remaining in the current repurchase authorization.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 7.41% due to these changes.

VGM Scores

Currently, AutoZone has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

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

Outlook

Estimates have been broadly 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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