On Feb 19, 2014, we issued an updated research report on
). While the company is focusing on expansion of stores and share
repurchase to boost earnings, rising debt and interest burden can
affect financials in the long term.
AutoZone reported positive earnings surprise in three of the
trailing 4 quarters. However, the company had a negative average
earnings surprise of 0.9%.
AutoZone reported a 16.2% rise in earnings per share to $6.29
for the first quarter of fiscal 2014 (ended Nov 23, 2013) from
$5.41 in the year-ago quarter. Earnings surpassed the Zacks
Consensus Estimate by 3 cents. Net income went up 7.2% to $218.1
million from $203.5 million in the year-ago quarter.
Revenues increased 5.1% year over year to $2,093.6 million.
However, it missed the Zacks Consensus Estimate of $2,099
The rising average age of cars on the U.S. roads, about 11.4
years currently, is increasing the demand for auto parts, thus
benefiting AutoZone. The company uses its significant cash flow
to open new stores every year and maintain a
low-to-mid-single-digit square foot growth rate.
However, AutoZone is suffering from rising debt. The company's
total debt increased to $4.17 billion as of Nov 23, 2013, from
$3.8 billion as of Nov 17, 2012. This is increasing the interest
expense as well. High gas prices, vendor consolidation and a high
degree of reliance on its private label brands are some other
The Zacks Consensus Estimate for AutoZone's fiscal 2014
earnings is $31.39 per share, up 15.61% over fiscal 2013. The
company is set to release its second-quarter earnings on Mar
Key Picks from the Sector
AutoZone currently carries a Zacks Rank #2 (Buy). Some
better-ranked stocks worth considering in the automobile industry
Advance Auto Parts Inc.
STRATTEC Security Corporation
), all of which carry a Zacks Rank #1 (Strong Buy).
ADVANCE AUTO PT (AAP): Free Stock Analysis
AUTOZONE INC (AZO): Free Stock Analysis
GENTEX CORP (GNTX): Free Stock Analysis
STRATTEC SEC CP (STRT): Free Stock Analysis
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