AutoZone's (AZO) Earnings Top Estimates In Q1, Improve Y/Y

AutoZone, Inc. (NYSE:AZO) has reported earnings of $14.30 per share in the first quarter of fiscal 2020 (ended Nov 23, 2019), up from the prior-year quarter’s figure of $13.47. Further, the figure surpassed the Zacks Consensus Estimate of $13.69. Net income edged down 0.3% year over year to $350.3 million.

In the reported quarter, net sales increased 5.7% year over year to $2,793 million. The top line also beat the Zacks Consensus Estimate of $2,760.7 million.

Domestic commercial sales totaled $621.5 million, up from the $546.9 million recorded in the year-ago quarter. Domestic same-store sales (sales at stores open at least for a year) were up 3.4% year over year, driven by improved performances of DIY and commercial businesses.

Gross profit increased to $1,501.1 million from the prior-year quarter’s $1,417.4 million. Operating profit also went up to $500 million from the $487.8 million registered in the year-ago period.

AutoZone, Inc. Price, Consensus and EPS Surprise

Store Opening & Inventory

During the reported quarter, AutoZone opened 18 stores in the United States, two in Mexico and two in Brazil. It exited the quarter with 5,790 stores in the United States, 606 in Mexico and 37 in Brazil. The total store count was 6,433 as of Nov 23.

AutoZone’s inventory improved 9.1% year over year in the reported quarter, aided by store openings and increased product placement. At the end of the quarter, inventory per location was $694,000, up from the year-ago figure of $658,000.

Financials and Share Repurchases

AutoZone had cash and cash equivalents of $158 million as of Nov 23, 2019, down from $252 million as of Nov 17, 2018. Total debt amounted to $5,287.3 million, marking an increase from $5,156 million as of Nov 17, 2018.

In the fiscal first quarter, AutoZone repurchased 403,000 shares for $450 million at an average price of $1,116 per share. At the end of this period, the company had shares worth $1.3 billion remaining in the current repurchase authorization.

Outlook

The company expects to meet or exceed customer needs across all channels, backed by its initiatives to improve inventory availability and drive DIY sales. AutoZone is also aimed at boosting its operating earnings and cash flow, and utilize its balance sheet and capital effectively.

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks in the Auto-Tires-Trucks sector are BRP Inc. (NASDAQ:DOOO) , Spartan Motors, Inc. (NASDAQ:SPAR) and SPX Corporation (NYSE:SPXC) . While BRP and Spartan Motors flaunt a Zacks Rank #1 (Strong Buy), SPX carries a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

BRP has a projected earnings growth rate of 19.75% for the current year. Its shares have gained 73.3% over the past year.

Spartan Motors has an estimated earnings growth rate of 85.42% for the ongoing year. The company’s shares have surged 148.2% in a year’s time.

SPX has an expected earnings growth rate of 23.18% for 2019. The stock has appreciated 84.5% in the past year.

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