AutoZone, Inc. ($AZO) Earnings (Q3 FY22)

 AutoZone, Inc. ($AZO) Earnings and Opinion:


AutoZone is a company in the Consumer Cyclical sector and operates in the Specialty Retail industry. The company distributes automotive replacement parts and accessories. AutoZone was founded in 1979 and is currently headquartered in Memphis, Tennessee. The company was first traded on the stock market in 1991.

AutoZone EPS and Revenue (Q3 FY22):

  • EPS of $29.03 beating expectations of $26.13
  • Revenue of $3.87B beating expectations of $3.71B
AutoZone Q3 Highlights:
  • Revenue increased 5.9% Y/Y
  • Domestic same store sales increased 2.6% for the quarter
  • AutoZone opened 24 new stores during the quarter
  • Net income of $592.6 M
  • Operating profit decreased by 2.2%
  • EPS increased 9.6% Y/Y
Opinion:
AutoZone is currently trading higher today after reporting earnings before the market opened this morning. The company beat EPS and revenue expectations by solid margins. They also saw continued growth in the same stores sales metric. Talk about a company with a solid earnings report, nothing went wrong for AutoZone in this quarter. With some of the margins getting a little bit tighter, the decrease was better than expected given all of the current economic conditions. Revenue and EPS both grew by a solid margin given the company and sector. AutoZone was able to open 24 new stores as well this quarter which is another plus for the company. On terms of stock performance, AutoZone has outperformed the market this year and hasn't seen a decline yet. The stock is up a tad under 1% over the past 6 months which is better than any other stock that is probably down over that time period. AutoZone is one of the companies that already has a solid foundation and can be somewhat considered recession proof. They offer car parts which are much needed on a daily basis for people to keep their cars in operation to get places. As far as valuations go, AutoZone has a P/E of 15.34 and a P/S of 2.37. These both signal that the stock is relatively cheap at this time. However I see 3 things that may apprehend you decision on investing in AutoZone. The first one has to be the P/B ratio of -11.78, which shows that the return on assets is not where it needs to be. Another problem would be the return on equity which is -103.36%, I want to see them at least increase it a little bit. The last thing to watch out for would be the $200M in cash compared to the $8.75B in debt. This is a huge difference and something that needs to be monitored. Personally, this isn't a bad company at all. If I were to invest in a car part and accessories store, this is by far the best decision out of all of them. I just don't see as much upside with AutoZone as I do with some other companies in the Consumer Cyclical sector. Therefore, I am going to pass up on this opportunity and check in on future earnings to see if they can improve on the 3 areas they are slacking right now.

*Information from AutoZone, Yahoo Finance, Google, and CMLVIZ

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