Why Is AutoZone (AZO) Up 8.2% Since Last Earnings Report?

It has been about a month since the last earnings report for AutoZone (AZO). Shares have added about 8.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is AutoZone due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

AutoZone Q4 Earnings & Sales Beat Estimates

AutoZone reported reported earnings of $40.51 per share in fourth-quarter fiscal 2022, up 13.4% from the prior-year figure of $35.72. The bottom line surpassed the Zacks Consensus Estimate of $38.38 a share. Our estimate for fiscal fourth-quarter 2022 EPS was $37.71. The net sales also grew 8.9% to $5,348.3 million. The top line beat the Zacks Consensus Estimate of $5,143 million. Our estimate for the top line was $5,103.1 million.

In the reported quarter, the domestic commercial sales totaled $1,442.3 million, up from $1,182.6 million recorded in the year-ago period. The domestic same-store sales (sales at stores open at least for a year) rose 6.2%.

The gross profit increased to $2,755.8 million from the prior-year quarter’s $2,567.8 million. The operating profit increased 5.7% year over year to $1,103.8 million.

Store Opening & Inventory

During the fiscal year ended Aug 27, 2022, AutoZone opened 118 new stores and closed one in the United States, opened 39 stores in Mexico and 20 stores in Brazil. It exited the quarter with 6,168 stores in the United States, 703 in Mexico and 72 in Brazil. The total store count was 6,943 as of Aug 27, 2022.

AutoZone’s inventory improved 21.5% year over year in the reported quarter, led by growth initiatives and inflation. At quarter-end, the inventory per location was $812,000, up from $686,000 a year ago.

Financials and Share Repurchases

AutoZone had cash and cash equivalents of $264.4 million as of Aug 27, 2022, down from $1,171.3 million on Aug 28, 2021. The total debt amounted to $6,122.1 million as of Aug 27, 2022, marking an increase from $5,269.8 million on Aug 28, 2021.

Under its share repurchase program, AutoZone repurchased 474,000 shares of its common stock for $1 billion during the fiscal fourth quarter, at an average price of $2,111 per share. In the fiscal year, AutoZone repurchased 2.2 million shares of its common stock for $4.4 billion at an average price of $1,964 per share. At year-end, it had nearly $1.1 billion remaining under its current share repurchase authorization.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

The consensus estimate has shifted -10.74% due to these changes.

VGM Scores

Currently, AutoZone has a great Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, AutoZone has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.