{"id":58931,"date":"2023-09-18T06:00:15","date_gmt":"2023-09-18T10:00:15","guid":{"rendered":"https:\/\/www.ino.com\/blog\/?p=58931"},"modified":"2023-09-18T18:26:05","modified_gmt":"2023-09-18T22:26:05","slug":"is-autozone-azo-a-buy-before-earnings-report","status":"publish","type":"post","link":"https:\/\/wwwtest.ino.com\/blog\/2023\/09\/is-autozone-azo-a-buy-before-earnings-report\/","title":{"rendered":"Is Autozone (AZO) a Buy Before Earnings Report?"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Renowned premier retailer and distributor of automotive replacement parts and accessories,<\/span><a href=\"https:\/\/quotes.ino.com\/charting\/?s=NYSE_AZO\"> <span style=\"font-weight: 400;\">AutoZone, Inc. (AZO)<\/span><\/a><span style=\"font-weight: 400;\">, will unveil its fourth-quarter results before the stock market opens on Tuesday, September 19, 2023.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Analysts expect the company\u2019s EPS and revenue to grow 11.7% and 4.9% year-over-year to $45.23 and $5.61 billion, respectively.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">AZO initially cemented its reputation as the inaugural retailer, providing an expansive inventory of automotive parts. Its sustained emphasis on exceptional customer service, convenient shopping experiences, and diverse product offerings underpins its position at the forefront of auto part retail.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The company harnesses its unique value proposition in the sector, combining remarkable customer service with complementary services and efficient supply chain management. This strategic approach fostered an enduring track record of substantial returns.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">During the quarter ended May 6, 2023, AZO inaugurated<\/span><a href=\"https:\/\/about.autozone.com\/news-releases\/news-release-details\/autozone-3rd-quarter-same-store-sales-increase-19-eps-increases\"> <span style=\"font-weight: 400;\">22 new stores<\/span><\/a><span style=\"font-weight: 400;\"> in the U.S., along with six in Mexico and two in Brazil.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">AZO\u2019s Auto Parts Stores segment revenue, accounting for a striking 98.2% of overall revenue, experienced a 5.8% growth year-over-year, equating to $4.02 billion for the same quarter. This division comprises retail and distribution of automotive parts via physical stores operating across the U.S., Mexico, and Brazil.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Each outlet presents an extensive range of products for various vehicles, stretching from new to remanufactured hard parts to various maintenance items, accessories, and non-vehicle products.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">AZO's capital allocation policy exalts high return rates from cash flow reinvestment, with the surplus channeled towards share repurchases. Over time, this approach resulted in a stark 80% share count decrease over the past years.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">AZO's prodigious share buyback initiative has drawn significant attention since the beginning of the millennium. Following May 6, 2023, and through June 2, 2023, the company repurchased 86.7 thousand shares of its common stock at an aggregate cost of $219.9 million.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">AZO's growth trajectory is marked by a dual-pronged strategy that encourages organic expansion of its store network while simultaneously facilitating growth through targeted acquisitions.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This industry giant further bolsters its portfolio by prioritizing commercial sales that include collaborations with professional clients such as auto repair shops and fleet operators. Demonstrating a judicious approach to market diversification, AZO stands resilient against localized economic fluctuations by cultivating a geographically diverse DIY and professional customer base.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Here\u2019s what could influence AZO\u2019s performance in the upcoming months:<\/span><\/p>\n<p><b>Robust Financials<\/b><\/p>\n<p><span style=\"font-weight: 400;\">For the third quarter ended May 6, 2023, AZO\u2019s net sales increased 5.8% year-over-year to $4.09 billion. Domestic same-store sales, or sales for stores open at least one year, increased 1.9% for the quarter. Its gross profit rose 7% from the year-ago quarter to $2.15 billion. The company\u2019s operating profit grew 9.3% year-over-year to $858.48 million.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Its net income and net income per share grew 9.3% and 17.5% from the prior-year quarter to $647.72 million and $34.12, respectively. For the nine months that ended May 6, 2023, AZO\u2019s cash and cash equivalents stood at $274.92 million, up 4.5% year-over-year.<\/span><\/p>\n<p><b>Solid Historical Growth<\/b><\/p>\n<p><span style=\"font-weight: 400;\">AZO\u2019s revenue grew at CAGRs of 12.3% and 8.9% over the past three and five years, respectively. Its EBITDA and EBIT grew at a CAGR of 13.3% and 14.3% over the past three years. Moreover, its levered free cash flow grew at 8.7% and 10.3% over the past three and five years, respectively.<\/span><\/p>\n<p><b>High Profitability<\/b><\/p>\n<p><span style=\"font-weight: 400;\">AZO\u2019s trailing-12-month cash from operations of $3.10 billion is significantly higher than the industry average of $223.80 million. Its trailing-12-month EBITDA margin of 22.41% is 105.1% higher than the industry average of 10.93%. Its trailing-12-month net income margin of 14.45% is 228.8% higher than the industry average of 4.40%.<\/span><\/p>\n<p><b>Growing Interest<\/b><\/p>\n<p><span style=\"font-weight: 400;\">The stock has garnered significant institutional attention recently, evident from the changes made to the holdings of AZO stock by such investors. Institutions hold roughly<\/span><a href=\"https:\/\/www.nasdaq.com\/market-activity\/stocks\/AZO\/institutional-holdings\"> <span style=\"font-weight: 400;\">92.1% of AZO shares<\/span><\/a><span style=\"font-weight: 400;\">. Of the 1,134 institutional holders, 420 have increased their positions in the stock. Moreover, 88 institutions have taken new positions in the stock with 147,383 shares, reflecting signs of bullishness.<\/span><\/p>\n<p><b>Price Performance<\/b><\/p>\n<p><span style=\"font-weight: 400;\">As a result of such increased attention, AZO\u2019s shares have gained 16.8% over the past year to close the last trading session at $2529.68. Over the past six months, the stock gained 7%.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Moreover, AZO\u2019s stock is trading above its 50-day and 200-day moving averages of $2,503.45 and $2,492.19, respectively, indicating an uptrend.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Wall Street analysts expect the stock to reach $2,860.17 in the next 12 months, indicating a potential<\/span><a href=\"https:\/\/www.tipranks.com\/stocks\/AZO\/forecast\"> <span style=\"font-weight: 400;\">upside of 13.1%<\/span><\/a><span style=\"font-weight: 400;\">. The price target ranges from a low of $2,670 to a high of $3,020.<\/span><\/p>\n<p><b>Favorable Analyst Estimates<\/b><\/p>\n<p><span style=\"font-weight: 400;\">The consensus revenue and EPS estimates of $17.39 billion and $131.65 for the fiscal year 2023 (ended August 2023) represent 7% and 12.3% improvements year-over-year, respectively. Its revenue and EPS for fiscal 2024 are expected to increase 5.6% and 11.3% year-over-year to $18.36 billion and $146.58, respectively.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The company has an impressive earnings surprise history, surpassing the consensus revenue and EPS estimates in each of the trailing four quarters.<\/span><\/p>\n<p><b>Bottom Line<\/b><\/p>\n<p><span style=\"font-weight: 400;\">According to Statista, the size of the U.S.<\/span><a href=\"https:\/\/www.statista.com\/statistics\/323192\/automotive-aftermarket-size-in-the-united-states\/\"> <span style=\"font-weight: 400;\">automotive aftermarket<\/span><\/a><span style=\"font-weight: 400;\"> is expected to increase to $400 billion by 2023. The continuous increase in the number of automobiles on the roadway, coupled with their higher average age, has cumulatively contributed to a consistent rise in the client base for AZO. This rise has facilitated the steady enhancement of the company's same-store sales by approximately 4% annually for over a decade.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">AZO's scale also fortifies its competitive position, enabling it to obtain increasingly superior rates from suppliers. This advantage has subsequently widened its profit margins and enabled the company to increase its market share at the expense of its smaller rivals. These industry tailwinds and competitive strengths have propelled AZO\u2019s net income.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Moreover, as of May 6, 2023, the company boasted a cumulative total of 7,044 stores dispersed across the U.S. (6,248), Mexico (713), and Brazil (83). Anticipations are high as the company continues to expand its retail presence, presumably leading to an escalation in sales figures.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Given AZO's robust financial health, favorable analyst estimates, impressive historical growth trajectory, and high profitability, it would be judicious to take a position in the stock now.<\/span><\/p>\n<!-- AddThis Advanced Settings generic via filter on the_content --><!-- AddThis Share Buttons generic via filter on the_content -->","protected":false},"excerpt":{"rendered":"<p>Renowned premier retailer and distributor of automotive replacement parts and accessories, AutoZone, Inc. (AZO), will unveil its fourth-quarter results before the stock market opens on Tuesday, September 19, 2023. Analysts expect the company\u2019s EPS and revenue to grow 11.7% and 4.9% year-over-year to $45.23 and $5.61 billion, respectively. AZO initially cemented its reputation as the [&hellip;]<!-- AddThis Advanced Settings generic via filter on get_the_excerpt --><!-- AddThis Share Buttons generic via filter on get_the_excerpt --><\/p>\n","protected":false},"author":41,"featured_media":58704,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[32588,32587,32585,32589,32590,32586],"class_list":["post-58931","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-22-new-stores","tag-92-1-of-azo-shares","tag-automotive-aftermarket","tag-autozone","tag-inc-azo","tag-upside-of-13-1"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.4 (Yoast SEO v23.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Is Autozone (AZO) a Buy Before Earnings Report? - INO.com Trader&#039;s Blog<\/title>\n<meta name=\"description\" content=\"AutoZone (AZO) has a proven history of surpassing top and bottom-line estimates. 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