AutoZone's (AZO) Q2 Earnings Miss Estimates, Revenues Beat

AutoZone, Inc. (NYSE:AZO) reported adjusted earnings per share of $4.23 for second-quarter fiscal 2018 (ended Feb 10, 2018), missing the Zacks Consensus Estimate of $8.81.

Revenues improved 5.4% year over year to $2.41 billion in the reported quarter. Also, the figure surpassed the Zacks Consensus Estimate of $2.39 billion. Domestic same-store sales (sales of stores open at least for one year) also rose 2.2% year over year.

Gross profit increased to $1.28 billion from $1.21 billion in the prior-year quarter. Operating profit (EBIT) declined to $205.1 million from $384 million registered in the second quarter of fiscal 2017.

Operating expenses, as a percentage of sales, increased to 44.4% from 35.9% a year ago.

Store Opening & Inventory

During the quarter, AutoZone opened 35 new stores and closed one store in the United States. The company also opened three new stores in Mexico and two in Brazil. As of Feb 10, the company had 5,514 stores across 50 states in the United States, the District of Columbia and Puerto Rico; 532 in Mexico; 26 Interamerican Motor Corp. branches and 16 stores in Brazil. The total store count was 6,088 as of that date.

AutoZone’s inventory improved 4.7% year over year in the quarter, driven by store openings and increased product placement. Inventory per store increased to $671,000 from the year-ago figure of $665,000.

Share Repurchases

In the second quarter of fiscal 2018, AutoZone repurchased 227,000 shares for $174.9 million, reflecting an average price of $769 per share. The company had shares worth $296 million remaining for repurchase at the end of the second quarter.

Financial Details

AutoZone had cash and cash equivalents of $288.5 million as of Feb 10, 2018, up from $210.6 million as of Feb 11, 2017. Total debt amounted to $5.04 billion as of Feb 10, 2018, compared with $5.15 billion as of Feb 11, 2017.

Currently, AutoZone carries a Zacks Rank #2 (Buy).

A few other top-ranked stocks in the auto space are General Motors Company (NYSE:GM) , Volkswagen (DE:VOWG_p) AG (OTC:VLKAY) and AB Volvo (OTC:VLVLY) . Each of these stocks carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

General Motors has an expected long-term growth rate of 8.4%. In the past six months, shares of the company have gained 17%.

Volkswagen has an expected long-term growth rate of 18.7%. The shares of the company have risen 32.8% in the past six months.

AB Volvo has an expected long-term growth rate of 15%. In the past six months, shares of the company have rallied 12.6%.

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