AutoZone's (AZO) Q3 Earnings Beat Estimates, Revenues Miss

AutoZone, Inc. (NYSE:AZO) reported earnings of $13.42 per share in the third quarter of fiscal 2018 (ended May 5, 2018), beating the Zacks Consensus Estimate of $12.99. The figure was $11.44 in third-quarter fiscal 2017.

Revenues improved 1.6% year over year to $2.66 billion in the reported quarter. However, the figure missed the Zacks Consensus Estimate of $2.71 billion. Domestic same-store sales (sales of stores open at least for a year) rose 0.6% year over year.

Gross profit increased to $1.42 billion from $1.38 billion in the prior-year quarter. Operating profit (EBIT) rose to $545.8 million from $529.6 million registered in the third quarter of fiscal 2017.

Operating expenses, as a percentage of sales, increased to 33% from 32.4% a year ago.

Store Opening & Inventory

During the reported quarter, AutoZone opened 26 new stores and relocated one in the United States. The company also opened four new stores in Mexico. As of May 5, the company had 5,540 stores across 50 states in the United States, the District of Columbia and Puerto Rico; 536 in Mexico and 16 in Brazil. The total store count was 6,092 as of that date.

AutoZone’s inventory improved 3.7% year over year in the quarter under review, driven by store openings and increased product placement, partially offset by the sale of two business units. Inventory per location increased to $658,000 from the year-ago figure of $653,000.

Share Repurchases

In the third quarter of fiscal 2018, AutoZone repurchased 599,000 shares for $400 million, reflecting an average price of $667 per share. The company had shares worth $897 million remaining for repurchase at the end of the fiscal third quarter.

Financial Details

AutoZone had cash and cash equivalents of $218.4 million as of May 5, 2018, down from $227.1 million as of May 6, 2017. Total debt amounted to $4.95 billion as of May 5, 2018, compared with $5.15 billion as of May 6, 2017.

Currently, AutoZone carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the auto space are Oshkosh Corporation (NYSE:OSK) , Gentex Corporation (NASDAQ:GNTX) and Ferrari N.V. (NYSE:RACE) . While Oshkosh and Gentex sport a Zacks Rank #1 (Strong Buy), Ferrari carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Oshkosh has an expected long-term growth rate of 18.3%. Shares of the company have risen 24.2% over the past year.

Gentex has an expected long-term growth rate of 13%. In a year’s time, shares of the company have gained 31.5%.

Ferrari has an expected long-term growth rate of 17.3%. Over the past year, shares of the company have gained 58.1%.

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