Momentum Play: AutoZone, Inc.

AutoZone, Inc. (AZO) has been on an incredibly smooth trend higher for the last year, recently hitting a new multi-year high after reporting better-than expected Q4 results in late September.

Company Description

AutoZone, Inc, is as a specialty retailer and distributor of automotive parts and accessories. The company operates 4,389 stores in the United States and Puerto Rico and 238 in Mexico and has a market cap of $10.27 billion.

Fourth-Quarter Results

Revenue for the period was up 9.5% from last year to $2.4 billion. Earnings also came in strong at $5.66, 4% ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 5% over the last four quarters.

Domestic same-store sales were up 6.7%.

The company solid top-line growth was also accompanied by margin expansion, where gross margin increased to 50.5% from 50.3% last year on lower distribution costs and operating efficiencies. Operating expenses also improved, falling to 31.2% of revenue from 31.6% last year.

Shares Buy Backs

AutoZone was also busy executing its share buyback program during the quarter, repurchasing 2.8 million shares of its common stock for $565 million at an average price of $199. As it stands, the company still has $185 million left under its buyback authorization program.

AutoZone continued to grow during the quarter too, opening 80 new stores in the U.S. and 26 in Mexico.

Estimates

We did see some upward movement in estimates on the good quarter, with the current year adding 56 cents to $17.25 and the next year also gaining 56 cents to $19.42, a solid 13% growth projection.

Valuation

But in spite of the recent gains, AZO still has value, trading with a forward P/E of 13X against its peers 18X.

12-Month Chart

AZO has been gaining along an incredibly smooth trend line for most of the last year, recently hitting a new multi-year high at $228.61 after jumping higher on the good quarter. The MACD below the chart is bullish too, with the short-term average trading ahead of the long-term average. Look for support from the trend line on any weakness, take a look below.

AUTOZONE INC (AZO): Free Stock Analysis Report

About Michael Vodicka 49 Articles

Affiliation: Zacks Investment Research

Visit: Zacks Investment Research

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