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AutoZone (AZO) Q4 Earnings Beat on Higher Commercial Sales

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AutoZone, Inc. (AZO - Free Report) has reported earnings of $22.59 per share in the fourth quarter of fiscal 2019 (ended Aug 31, 2019), up from $15.02 in the prior-year period. Further, the figure surpassed the Zacks Consensus Estimate of $21.64. Net income rose 41.2% year over year to $565.2 million, benefitting from lower effective income tax rate.

In the reported quarter, net sales improved 12% year over year to $3,988.4 million. The top line also beat the Zacks Consensus Estimate of $3,940 million.

Domestic commercial sales totaled $886.5 million, up from $731.8 million in the year-ago quarter.Domestic same-store sales (sales at stores open at least for a year) rose 3% year over year, driven by improved performances of DIY and commercial businesses.

Gross profit increased to $2,130.4 million from $1,907.8 million in the prior-year quarter. Operating profitalso rose to $780.7 million from $591.3 million registered in the year-ago period.

AutoZone, Inc. Price, Consensus and EPS Surprise

AutoZone, Inc. Price, Consensus and EPS Surprise

AutoZone, Inc. price-consensus-eps-surprise-chart | AutoZone, Inc. Quote

Store Opening & Inventory

During the quarter ended Aug 31, 2019, AutoZone opened 86 stores in the United States, of which 28 were in Mexico and 10 in Brazil. As of the same date, it had 5,772 stores across 50 states in the United States, the District of Columbia and Puerto Rico; 604 in Mexico; and 35 in Brazil. The total store count was 6,411 as of Aug 31.

AutoZone’s inventory improved 9.5% year over year in the quarter under review, driven by store openings and increased product placement. At the end of the quarter, inventory per location increased to $674,000 from the year-ago figure of $636,000.

Financials and Share Repurchases

AutoZone had cash and cash equivalents of $176 million as of Aug 31, 2019, down from $217 million onAug 25, 2018. Total debt amounted to $5,206.3 million, marking an increase from $5,006 million on Aug 25, 2018.

In the fourth quarter of fiscal 2019, AutoZone repurchased 634,000 shares for $692 million at an average price of $1,091 per share. At the end of the quarter, the company had shares worth $476.8 million remaining in the current repurchase authorization.

Zacks Rank & Key Picks

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

Some better-ranked stocks in the Auto-Tires-Trucks sector are Lithia Motors (LAD - Free Report) , Douglas Dynamics, Inc. (PLOW - Free Report) and SPX Corp. (SPXC - Free Report) . While Lithia Motors currently sports a Zacks Rank #1 (Strong Buy), Douglas Dynamics and SPX carry a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Lithia Motors has an expected earnings growth rate of 12.8% for 2019. The company’s shares have gained 71.6% year to date.

Douglas Dynamics has an expected earnings growth rate of 11.7% for 2019. The company’s shares have risen 24.7% year to date.

SPX has an estimated earnings growth rate of 22.7% for the current year. Its shares have gained 44.2% year to date.

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