On Mar 10, we maintained our Neutral recommendation on
), despite rising gas prices and the company's heavy reliance on
its private label brands as we are mainly encouraged with the
company's aggressive share repurchase program, expansion of hub
stores as well as better performance in the second quarter of
AutoZone's earnings increased 15.2% to $4.78 per share in the
second quarter of fiscal 2013 ended on Feb 9, 2013 from $4.15 in
the year-ago quarter. Earnings per share surpassed the Zacks
Consensus Estimate by 4 cents. AutoZone's revenues for the
quarter increased 2.8% to $1.86 billion, marginally missing the
Zacks Consensus Estimate of $1.88 billion.
Following the release of the second quarter results, the Zacks
Consensus Estimate for fiscal 2013 decreased marginally by 0.1%
to $27.54 per share. The Zacks Consensus Estimate for fiscal 2014
also went down 0.2% to $30.96 per share. Currently, AutoZone
retains a Zacks Rank #3 (Hold).
AutoZone aggressively focuses on store opening strategy every
year. In fiscal 2012, the company opened 72 new stores in the U.S
and 24 new stores in Mexico. In the last quarter, AutoZone opened
32 new stores in the U.S, and 9 new stores in Mexico. As of Feb
9, 2013, the company had 4,735 stores in 49 states, the District
of Columbia and Puerto Rico in the U.S., 334 stores in Mexico and
one store in Brazil.
Advance Auto Parts Inc.
), another leading retailer and distributor of automotive
replacement parts and accessories, also pursues an aggressive
store expansion strategy. During the fourth quarter of 2012, it
opened 67 stores, including 8 Autopart International stores. The
company opened 137 stores in 2012, including 21 Autopart
AutoZone benefits from the rising demand for auto parts with the
growing age of vehicles on road. Revenues from Mexico benefited
from the abundance of old cars and a shortage of quality parts.
With this situation, AutoZone plans to gain market share by
category management efforts and supply-chain initiatives in the
However, we are concerned about rising gas prices, which have an
adverse impact on miles driven and lead to deferment of purchases
by the customers. In addition, AutoZone has a high degree of
reliance on its private label brands, which could hinder its
Other Stocks to Look For
Few stocks that are also performing well in the industry where
AutoZone operates are
O'Reilly Automotive Inc.
). O'Reilly is a Zacks Rank #1 (Strong Buy) stock while CarMax is
a Zacks Rank #2 (Buy) stock.
ADVANCE AUTO PT (AAP): Free Stock Analysis
AUTOZONE INC (AZO): Free Stock Analysis
CARMAX GP (CC) (KMX): Free Stock Analysis
O REILLY AUTO (ORLY): Free Stock Analysis
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