AutoZone, Inc. (AZO - Analyst Report) is one of the nation’s leading specialty retailers of automotive replacement parts and accessories, operating in the Do-It-Yourself (“DIY”) retail, Do-It-for-Me (“DIFM”) commercial and other customer markets. The company is focused on increasing sales through store expansion and boosting earnings via an aggressive share repurchase program.
However, AutoZone has been facing challenges in terms of falling cash balance, consolidation among vendors and a heavy reliance on private-label brands, which may affect margins.
Estimate Trend & Surprise History
Investors should note that the third quarter of fiscal 2015 (ended May 9, 2015) earnings estimates for AutoZone have been moving down recently. The Zacks Consensus Estimate has inched down to $9.50 from $9.51 a week ago.
However, the company delivered a positive earnings surprise of 2.20% in the second quarter. It also recorded positive earnings surprises in three of the trailing four quarters with an average beat of around 0.98%. Investors have been eagerly awaiting AutoZone’s latest earnings report to see whether it delivers an earnings beat in the third quarter.
Zacks Rank
AutoZone currently has a Zacks Rank #3 (Hold), but that could change following its earnings report which was just released. We have highlighted some of the key stats from the company’s earnings announcement below:
Earnings Surpass Estimates, Up Y/Y
AutoZone reported earnings of $9.57 per share in the third quarter of fiscal 2015, surpassing the Zacks Consensus Estimate of $9.50. Earnings were significantly higher than $8.46 generated in the year-ago quarter.
Revenues Miss Estimates, Rise Y/Y
AutoZone logged revenues of $2.49 billion, marginally missing the Zacks Consensus Estimate of $2.50 billion. However, revenues were 6.5% higher than $2.34 billion posted a year-ago.
Key Stats/Developments to Note
AutoZone opened 27 stores in the U.S., 7 stores in Mexico and 2 stores in Brazil during the quarter. Additionally, it relocated one store in the U.S. Further, Interamerican Motor Corporation (“IMC”) relocated its East Coast distribution center and related branch during the quarter. As of May 9, 2015, the company had 5,069 stores in 49 states, the District of Columbia and Puerto Rico in the U.S., 418 stores in Mexico, 7 stores in Brazil and 18 IMC branches. Thus, the total store count was 5,512 as of that date.
Market Reaction
AutoZone’s shares were rising in pre-market trading following the release. Clearly the initial reaction to the release is positive.
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