AutoZone (AZO) Down 0.4% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for AutoZone (AZO). Shares have lost about 0.4% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is AutoZone due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

AutoZone Q1 Earnings & Sales Beat Estimates

AutoZone reported earnings of $27.45 per share for first-quarter fiscal 2023, up 6.8% from the prior-year figure of $25.69. The bottom line surpassed the Zacks Consensus Estimate of $25.15 per share on higher-than-expected comps growth. The net sales also grew 8.6% to $3,985.1 million. The top line beat the Zacks Consensus Estimate of $3,836 million.

In the reported quarter, the domestic commercial sales totaled $1,034.4 million, up from $899.9 million recorded in the year-ago period. The domestic same-store sales (sales at stores open at least for a year) rose 5.6%, ahead of the Zacks Consensus Estimate of 3.37%. The gross profit increased to $1,994.6 million from the prior-year quarter’s figure of $1,925.2 million. The operating profit slipped 4.2% year over year to $723 million.

Store Opening & Inventory

During the quarter ended Nov 19, AutoZone opened 28 new stores in the United States, three in Mexico and four in Brazil. It exited the quarter with 6,196 stores in the United States, 706 in Mexico and 76 in Brazil. The total store count was 6,978 as of Nov 19.

AutoZone’s inventory increased 17.6% year over year in the reported quarter, led by growth initiatives and inflation. At quarter-end, the inventory per location was negative $249,000 compared with negative $207,000 a year ago.

Financials and Share Repurchases

As of Nov 19, AutoZone had cash and cash equivalents of $269.8 million, plunging from $961.1 million on Nov 20, 2021. The total debt amounted to $6,328.3 million as of Nov 19, marking an increase from $5,271.3 million on Nov 20, 2021.

Under its share repurchase program, AutoZone repurchased 392,000 shares of its common stock for $900 billion during the fiscal first quarter of 2023, at an average price of $2,295 per share. At quarter-end, it had nearly $2.7 billion remaining under its current share repurchase authorization.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review.

VGM Scores

At this time, AutoZone has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, AutoZone has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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