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AutoZone's (AZO) Q3 Earnings & Revenues Miss Estimates
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AutoZone, Inc. (AZO - Free Report) reported a 12.6% rise in earnings per share to $10.77 for the third quarter of fiscal 2016 (ended May 7, 2016) from $9.57 recorded in the year-ago quarter. Earnings, however, missed the Zacks Consensus Estimate of $10.96 by a wide margin. Net income increased 6% to $327.5 million from $309.1 million a year ago.
Quarterly revenues improved 4% year over year to $2.59 billion in the reported quarter. However, the figure lagged the Zacks Consensus Estimate of $2.65 billion. Domestic same-store sales (sales for stores open at least for one year) grew 2% in the quarter.
Gross profit rose to $1.37 billion (or 52.8% of sales) from $1.30 billion (or 52.3% of sales) in the prior-year quarter. The year-over-year improvement in gross margin was backed by increased merchandise margins, partially offset by elevated supply chain costs due to current-year inventory initiatives.
Operating profit improved to $536.4 million from $513.9 million in the third quarter of fiscal 2015. Operating expenses, as a percentage of sales, increased to 32.2% from 31.6% a year ago owing to higher legal expense and store payroll.
Store Opening and Inventory
AutoZone opened 33 stores in the U.S., 7 stores in Mexico, and 1 Interamerican Motor Corporation (“IMC”) branch during the quarter. Additionally, it relocated 1 store in the U.S. As of May 7, 2016, the company had 5,226 stores in 50 states, the District of Columbia and Puerto Rico in the U.S., 458 stores in Mexico, 8 stores in Brazil and 25 IMC branches. Thus, the total store count was 5,717 as of that date.
AutoZone’s inventory grew 3.7% year over year in the quarter, driven by store openings. Inventory per store stayed flat at the year-ago level of $629,000.
Share Repurchases
In the reported quarter, AutoZone repurchased 687,000 shares for $533 million, reflecting an average price of $775 per share. The company had shares worth $765 million remaining for repurchase at the end of the quarter.
Financial Details
AutoZone had cash and cash equivalents of $213.4 million as of May 7, 2016, up from $153.3 million as of May 9, 2015. Total debt amounted to $4.95 billion as of May 7, 2016, compared with $4.51 billion as of May 9, 2015. The company had a stockholders’ deficit of $1.86 billion as of May 7, 2016, up from $1.64 billion as of May 9, 2015.
During the first nine months of fiscal 2016, AutoZone generated net cash flow of $789.9 million before share repurchases and changes in debt compared with $679.0 million in the first nine months of fiscal 2015. Capital spending increased to $299.9 million from $292.7 million a year ago.
Zacks Rank
Currently, AutoZone carries a Zacks Rank #2 (Buy). Other well-ranked automobile stocks include Lear Corp. (LEA - Free Report) , Superior Industries International, Inc. (SUP - Free Report) and Oshkosh Corporation (OSK - Free Report) . All the three stocks sport a Zacks Rank #1 (Strong Buy).
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AutoZone's (AZO) Q3 Earnings & Revenues Miss Estimates
AutoZone, Inc. (AZO - Free Report) reported a 12.6% rise in earnings per share to $10.77 for the third quarter of fiscal 2016 (ended May 7, 2016) from $9.57 recorded in the year-ago quarter. Earnings, however, missed the Zacks Consensus Estimate of $10.96 by a wide margin. Net income increased 6% to $327.5 million from $309.1 million a year ago.
Quarterly revenues improved 4% year over year to $2.59 billion in the reported quarter. However, the figure lagged the Zacks Consensus Estimate of $2.65 billion. Domestic same-store sales (sales for stores open at least for one year) grew 2% in the quarter.
Gross profit rose to $1.37 billion (or 52.8% of sales) from $1.30 billion (or 52.3% of sales) in the prior-year quarter. The year-over-year improvement in gross margin was backed by increased merchandise margins, partially offset by elevated supply chain costs due to current-year inventory initiatives.
Operating profit improved to $536.4 million from $513.9 million in the third quarter of fiscal 2015. Operating expenses, as a percentage of sales, increased to 32.2% from 31.6% a year ago owing to higher legal expense and store payroll.
Store Opening and Inventory
AutoZone opened 33 stores in the U.S., 7 stores in Mexico, and 1 Interamerican Motor Corporation (“IMC”) branch during the quarter. Additionally, it relocated 1 store in the U.S. As of May 7, 2016, the company had 5,226 stores in 50 states, the District of Columbia and Puerto Rico in the U.S., 458 stores in Mexico, 8 stores in Brazil and 25 IMC branches. Thus, the total store count was 5,717 as of that date.
AutoZone’s inventory grew 3.7% year over year in the quarter, driven by store openings. Inventory per store stayed flat at the year-ago level of $629,000.
Share Repurchases
In the reported quarter, AutoZone repurchased 687,000 shares for $533 million, reflecting an average price of $775 per share. The company had shares worth $765 million remaining for repurchase at the end of the quarter.
Financial Details
AutoZone had cash and cash equivalents of $213.4 million as of May 7, 2016, up from $153.3 million as of May 9, 2015. Total debt amounted to $4.95 billion as of May 7, 2016, compared with $4.51 billion as of May 9, 2015. The company had a stockholders’ deficit of $1.86 billion as of May 7, 2016, up from $1.64 billion as of May 9, 2015.
During the first nine months of fiscal 2016, AutoZone generated net cash flow of $789.9 million before share repurchases and changes in debt compared with $679.0 million in the first nine months of fiscal 2015. Capital spending increased to $299.9 million from $292.7 million a year ago.
Zacks Rank
Currently, AutoZone carries a Zacks Rank #2 (Buy). Other well-ranked automobile stocks include Lear Corp. (LEA - Free Report) , Superior Industries International, Inc. (SUP - Free Report) and Oshkosh Corporation (OSK - Free Report) . All the three stocks sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>