AutoZone, Inc. ($AZO) Earnings (Q4 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 retails and distributes automotive replacement parts and accessories. AutoZone was founded in 1979 and is currently headquartered in Memphis, Tennessee. The company made its IPO on May 1, 1991.

AutoZone Earnings Results:

  • Revenues of $5.35B beating expectations of $5.16B
  • Gross Profit of $2.76B beating expectations of $2.68B
  • Operating Income of $1.10B beating expectations of $1.06B
  • Adjusted EPS of $40.51 beating expectations of $38.42
  • Domestic Comps of 6.2% beating expectations of 3.1%
Opinion:
AutoZone is currently falling a tiny bit, despite beating estimates in most metrics. The company reported earnings before the market opened this morning. However, the bearish market seems to be taking the stock down. AutoZone reported an earnings beat and showed sales growth in the quarter. We are seeing a market in which the demand for car repairs is rising. With new and used car prices skyrocketing, most see the better option as repairing their car, instead of going to purchase a new one. This is what causes stores like AutoZone to thrive in inflation times. The margins were also solid, with the only miss coming on the Gross Margin. As far as valuation goes, the company is trading at a relatively average P/E ratio of 19.14. The P/S ratio is at 2.64, which is considered undervalued. One thing that wows me the most, is the EPS they are able to obtain. ROE is at -92.10% and the current ratio sits below 1. It is a common theme for these auto part retailers to be on the verge of default, with all of the debt they have accumulating. In my opinion, the stock price in general will turn investors away. With the share price above $2,000, most people are overwhelmed. Many people were even turned away by the fact that Amazon (one of the best companies) was above $2,000 a share. I can see a little bit of upside in the near term for AutoZone, but it still shocks me how the company is able to stay afloat, especially with all of the technology changing. It's going to be interesting to see how technology changes and may have a possibility of putting this company under. I am going to stay away from AutoZone for now.

*Information from Yahoo Finance, Consensus Gurus, finviz

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