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Why Is AutoZone (AZO) Up 11.2% Since the Last Earnings Report?
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About a month has gone by since the last earnings report for AutoZone, Inc. (AZO - Free Report) . Shares have added about 11.2% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted 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 Q4 Earnings & Revenues Top Estimates, Up Y/Y
AutoZone reported 6.1% year-over-year growth in adjusted earnings per share to $15.18 for the fourth quarter of fiscal 2017 (ended Aug 26, 2017). Earnings beat the Zacks Consensus Estimate of $15.11. Net income increased 1.7% to $433.9 million.
For fiscal 2017, adjusted earnings per share increased year over year from $40.70 to $43.04.
Quarterly revenues improved 3.3% year over year to $3.51 billion in the reported quarter. Also, the figure surpassed the Zacks Consensus Estimate of $3.49 billion. Domestic same-store sales (sales for stores open at least for one year) rose 1% year over year in the quarter.
Fiscal 2017 sales rose to $10.89 from $10.64 billion a year ago.
Gross profit increased to $1.85 billion from $1.79 billion in the prior-year quarter. Operating profit rose to $707.6 million from $703.4 million recorded in the fourth quarter of fiscal 2016.
Operating expenses, as a percentage of sales, increased to 32.6% from 32.1% a year ago.
Store Opening & Inventory
During the quarter, AutoZone opened 84 stores in the United States and relocated one store in the United States. The company also opened 25 new stores in Mexico and five in Brazil. As of Aug 26, the company had 5,465 stores across 50 states in the United States, the District of Columbia and Puerto Rico, 524 in Mexico, 26 Interamerican Motor Corp. branches and 14 stores in Brazil. The total store count was 6,029 as of that date.
AutoZone’s inventory grew 6.9% year over year in the quarter, driven by store openings and increased product placement. Inventory per store increased to $644,000 from the year-ago level of $625,000.
Share Repurchases
In the fourth quarter of fiscal 2017, AutoZone repurchased 366,000 shares for $227 million, reflecting an average price of $622 per share. The company had shares worth $824 million remaining tobe repurchased at the end of the fiscal year.
Financial Details
AutoZone had cash and cash equivalents of $293.3 million as of Aug 26, 2017, up from $189.7 million as of Aug 27, 2016. Total debt amounted to $5.08 billion as of Aug 26, 2017 compared with $4.92 billion as of Aug 27, 2016.
During fiscal 2017, AutoZone generated net cash flow of $1.02 billion before share repurchases and changes in debt compared with $1.17 billion in fiscal 2016. During fiscal 2017, capital spending increased to $553.8 million from $488.8 in fiscal 2016.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been five revisions lower for the current quarter. While looking back an additional 30 days, we can see even more downside. There have been seven moves down in the last two months.
At this time, AutoZone's stock has a nice Growth Score of B, though it is lagging a lot on the momentum front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.
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Why Is AutoZone (AZO) Up 11.2% Since the Last Earnings Report?
About a month has gone by since the last earnings report for AutoZone, Inc. (AZO - Free Report) . Shares have added about 11.2% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted 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 Q4 Earnings & Revenues Top Estimates, Up Y/Y
AutoZone reported 6.1% year-over-year growth in adjusted earnings per share to $15.18 for the fourth quarter of fiscal 2017 (ended Aug 26, 2017). Earnings beat the Zacks Consensus Estimate of $15.11. Net income increased 1.7% to $433.9 million.
For fiscal 2017, adjusted earnings per share increased year over year from $40.70 to $43.04.
Quarterly revenues improved 3.3% year over year to $3.51 billion in the reported quarter. Also, the figure surpassed the Zacks Consensus Estimate of $3.49 billion. Domestic same-store sales (sales for stores open at least for one year) rose 1% year over year in the quarter.
Fiscal 2017 sales rose to $10.89 from $10.64 billion a year ago.
Gross profit increased to $1.85 billion from $1.79 billion in the prior-year quarter. Operating profit rose to $707.6 million from $703.4 million recorded in the fourth quarter of fiscal 2016.
Operating expenses, as a percentage of sales, increased to 32.6% from 32.1% a year ago.
Store Opening & Inventory
During the quarter, AutoZone opened 84 stores in the United States and relocated one store in the United States. The company also opened 25 new stores in Mexico and five in Brazil. As of Aug 26, the company had 5,465 stores across 50 states in the United States, the District of Columbia and Puerto Rico, 524 in Mexico, 26 Interamerican Motor Corp. branches and 14 stores in Brazil. The total store count was 6,029 as of that date.
AutoZone’s inventory grew 6.9% year over year in the quarter, driven by store openings and increased product placement. Inventory per store increased to $644,000 from the year-ago level of $625,000.
Share Repurchases
In the fourth quarter of fiscal 2017, AutoZone repurchased 366,000 shares for $227 million, reflecting an average price of $622 per share. The company had shares worth $824 million remaining tobe repurchased at the end of the fiscal year.
Financial Details
AutoZone had cash and cash equivalents of $293.3 million as of Aug 26, 2017, up from $189.7 million as of Aug 27, 2016. Total debt amounted to $5.08 billion as of Aug 26, 2017 compared with $4.92 billion as of Aug 27, 2016.
During fiscal 2017, AutoZone generated net cash flow of $1.02 billion before share repurchases and changes in debt compared with $1.17 billion in fiscal 2016. During fiscal 2017, capital spending increased to $553.8 million from $488.8 in fiscal 2016.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been five revisions lower for the current quarter. While looking back an additional 30 days, we can see even more downside. There have been seven moves down in the last two months.
AutoZone, Inc. Price and Consensus
AutoZone, Inc. Price and Consensus | AutoZone, Inc. Quote
VGM Scores
At this time, AutoZone's stock has a nice Growth Score of B, though it is lagging a lot on the momentum front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.