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Memphis, Tennessee-based AutoZone, Inc. (AZO) retails and distributes automotive replacement parts and accessories. Valued at $53.10 billion by market cap, it offers an extensive product line for cars, sport utility vehicles, vans, and light trucks, including new and remanufactured automotive hard parts, maintenance items, accessories, and non-automotive products. The auto parts retailer is expected to announce its fiscal fourth-quarter earnings for 2024 on Tuesday, Sep. 17.
Ahead of the event, analysts expect AZO to report a profit of $53.61 per share on a diluted basis, up 15.4% from $46.46 per share in the year-ago quarter. The company has consistently surpassed Wall Street’s EPS estimates in its last four quarterly reports. During the previous quarter, AZO repurchased 242 thousand shares of its common stock at an average price per share of $3,036, for a total investment of $734.70 million.
For the full year, analysts expect AZO to report EPS of $151.37, up 14.4% from $132.36 in fiscal 2023.
AZO stock has outperformed the S&P 500’s ($SPX) 19.9% gains over the past 52 weeks, with shares up 25% during this period. Similarly, it outshined the Consumer Disc ETF Vanguard’s (VCR) 10.3% gains over the same time frame.
AZO’s overall performance can be attributed to the nature of its business. It sells car parts and accessories, which makes its business recession-proof. Despite the uncertain macroeconomic environment, AZO has enjoyed durable demand. With higher new and used car prices, customers have been forced to keep their cars running for longer.
Moreover, the aggregate miles driven by Americans each year has been rising. Despite a brief setback during the pandemic, demand for auto parts and services remains strong. AZO opened 32 new stores in the U.S., 12 in Mexico, and one in Brazil for 45 net new stores. The company's emphasis on Trustworthy Advice and WOW! Customer Service has helped drive consistent same-store sales and earnings growth. Its plans to expand inventory availability, accelerate its domestic commercial business, and focus on customer satisfaction have driven AZO’s recent performance.
On May 21, AZO shares closed down more than 3% after reporting its Q3 results. Its comparable sales rose 1.9%, weaker than the consensus estimates of 3.3%. Its EPS of $36.69 topped Wall Street expectations of $35.67. The company’s revenue was $4.24 billion, but it missed Wall Street forecasts of $4.29 billion.
Its gross profit was 53.5%, increasing 102 basis points from the prior year, driven by higher merchandise margins and a 15-basis point ($7 million net) non-cash LIFO favorability. Operating profit increased 4.9% year over year to $900.20 million. AZO shares have been on an uptrend since the day its results were released.
Analysts’ consensus opinion on AZO stock is bullish, with a “Strong Buy” rating overall. Out of 22 analysts covering the stock, 17 advise a “Strong Buy” rating, one suggests a “Moderate Buy” rating, and four give a “Hold.” The average analyst price target for AZO is $3184.95, indicating a potential upside of 2.5% from the current levels.
On the date of publication, Dipanjan Banchur did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
