AutoZone (AZO) Rallies on Fourth Quarter Results

Shares of AutoZone Inc. (AZO) were trading up +18.60 or +2.55 percent to $747.00 per share in Tuesday’s premarket after the company announced better than expected fourth quarter earnings earlier this morning. AutoZone Inc. stock closed at $728.40 per share, up +3.41 or +0.47 percent in Monday’s regular trading session.

Founded in 1979, Memphis, Tennessee based AutoZone is the second largest after market retailer of automotive replacement parts and accessories in the United States.
The company has a total of 5,141 stores in 49 United States, the District of Columbia and Puerto Rico. With 441 outlets in Mexico and 7 stores in Brazil, AutoZone’s total number of stores comes to 5,609. In addition to auto parts, AutoZone markets the ALLDATA brand diagnostic and repair software through the website. The company also sells auto parts, accessories, maintenance items and non-automotive products through the,, and websites.

AutoZone reported net sales in the company’s fiscal fourth quarter ended August 29th, 2015 of $3.3 billion, an increase of +7.9 percent from the same period one year ago. Same store sales for U.S. stores open at least one year increased +4.5 percent in the quarter.

Fourth quarter net income came to $401.1 million, an increase of +7.4 percent over 2014’s fourth quarter, while diluted earnings per share were $12.75 versus $11.28 per share last year, an increase of +13.0 percent. Gross margins improved to a gross profit of 52.5 percent as a percentage of sales, beating last year’s 52.3 percent. Analysts expected the company to report earnings of $12.67 per share on $3.25 billion in revenue.

AutoZone attributed the improvement in gross margin to higher margins on merchandise, which were partially offset by -24 bps due to the impact of the company’s acquisition of the Interamerican Motor Corporation or IMC. Also, the company saw an impact of -24 bps for higher supply chain costs related to this year’s inventory initiatives.

In the company’s press release, Chairman, President and Chief Executive Officer Bill Rhodes thanked the organization for the thirty sixth consecutive quarter of double digit earnings per share growth, noting that, “For the year, we reached many milestones which included generating over $10 billion in sales and completing the IMC acquisition. Our testing of our inventory availability initiatives, including expanding our multi-deliveries per week to stores and opening mega hub locations has concluded. We have determined that these tests were successful and we will begin implementing our new supply chain strategy now and complete it in a few years. Additionally, as we have routinely stated, we will remain committed to our disciplined approach to growing operating earnings and utilizing our capital effectively.”

For the company’s full fiscal year, sales came to $10.2 billion, an increase of +7.5 percent over the prior year, with domestic same store sales increasing +3.8 percent. Net income for the year was $1.2 billion, an increase of +8.5 percent over 2014 with diluted earnings per share of $36.03, an increase of +14.1 percent.

The market and shareholders are reacting positively to the news, with AutoZone stock set to open sharply higher in this morning’s regular trading session. The stock has been on an uptrend and could test its all time high of $754.90 per share in the near term.

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Published on Sep 22, 2015
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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