On Nov 12, 2014, we issued an updated research report on AutoZone, Inc. (AZO). This Zacks Rank #3 (Hold) stock reported a positive earnings surprise of 0.45% in the last quarter.
AutoZone reported a 15.6% rise in earnings per share (adjusted for one extra week last year) to $11.28 for the fourth quarter of fiscal 2014 (ended Aug 30, 2014). Earnings surpassed the Zacks Consensus Estimate of $11.23.
Quarterly revenues (adjusted) increased 4.5% year over year to $3 billion, missing the Zacks Consensus Estimate of $3.06 billion. Domestic same-store sales (sales for stores open at least for one year) climbed 2.1% in the quarter.
The fourth quarter of fiscal 2014 marks the 32nd consecutive quarter during which AutoZone’s earnings per share grew in double digits. Earnings are expected to rise further, driven by flourishing revenues and higher gross margin from both the retail and commercial businesses, together with an increase in store count and regular share buybacks.
The company is focused on increasing sales through store expansion. AutoZone is also focused on an aggressive share repurchase program to boost earnings.
However, we remain concerned about high gas prices, falling cash balance, consolidation among vendors and a heavy reliance on private-label brands, which may affect margins. AutoZone’s cash and cash equivalents fell to $124.5 million as of Aug 30, 2014, from $142.2 million as of Aug 31, 2013. The company’s total debt increased to $4.3 billion as of Aug 30, 2014, from $4.2 billion as of Aug 31, 2013.
Key Picks from the Sector
Investors interested in the auto industry could consider better-ranked stocks like Gentex Corp. (GNTX), Douglas Dynamics, Inc. (PLOW) and STRATTEC Security Corporation (STRT), all sporting a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment