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AutoZone (AZO) Up 2.3% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for AutoZone (AZO - Free Report) . 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 Q1 Earnings & Sales Beat Estimates

AutoZone reported earnings of $25.69 per share for first-quarter fiscal 2022 (ended Nov 20, 2021), surging from the prior-year figure of $18.61. The bottom line also surpassed the Zacks Consensus Estimate of $20.83. Robust comparable sales growth led to this outperformance.

Net income increased 25.5% year over year to $555.2 million. Net sales also grew 16.3% year over year to $3,668.9 million. The top line, moreover, topped the Zacks Consensus Estimate of $3,358 million.

For the reported quarter, domestic commercial sales totaled $899.9 million, up from $695.3 million recorded in the year-ago period. In addition, domestic same-store sales (sales at stores open at least for a year) rose 13.6%, handily beating the Zacks Consensus Estimate of 3.9%.

Gross profit increased to $1,925.1 million from the prior-year quarter’s $1,675.6 million. Operating profit moved up to $754.5 million from $615.2 million registered in the year-earlier period.

Store Opening & Inventory

During the fiscal first quarter, AutoZone opened 15 stores in the United States, two in Mexico and one in Brazil. It exited the quarter with 6,066 stores in the United States, 666 in Mexico and 53 in Brazil. The total store count was 6,785 as of Nov 20, 2021.

AutoZone’s inventory improved 3% year over year for the reported quarter on store openings. At quarter-end, inventory per location was $703,000, up from the year-ago figure of $702,000.

Financials and Share Repurchases

AutoZone had cash and cash equivalents of $961.1 million as of Nov 20, 2021, down from $1,664 million on Nov 21, 2020. Total debt amounted to $5,271.3 million as of Nov 20, 2021, marking a decrease from $5,514.8 million on Nov 21, 2020.

In the fiscal first quarter, it repurchased 515,000 shares for $900 million at an average price of $1,749 per share. The company has shares worth around $1 billion remaining in the current repurchase authorization.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 11.18% due to these changes.

VGM Scores

At this time, AutoZone has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise AutoZone has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.


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