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AutoZone (AZO) Q4 Earnings Beat Estimates, Revenues Miss

Zacks

AutoZone, Inc. AZO reported a 12.2% rise in earnings per share to $14.30 for the fourth quarter (ended Aug 27, 2016) of fiscal 2016 from $12.75 recorded in the year-ago quarter. Earnings marginally surpassed the Zacks Consensus Estimate of $14.29. Net income increased 6.4% to $426.8 million from $401.1 million a year ago.

Quarterly revenues improved 3.3% year over year to $3.40 billion in the reported quarter. However, the figure lagged the Zacks Consensus Estimate of $3.44 billion. Domestic same-store sales (sales for stores open at least for one year) grew 1% in the quarter.

Gross profit rose to $1.79 billion (or 52.8% of sales) from $1.73 billion (or 52.5% of sales) in the prior-year quarter. The year-over-year improvement in gross margin was backed by lower acquisition costs, partially offset by elevated supply chain costs due to current-year inventory initiatives.

Operating profit improved to $703.4 million from $669.3 million in the fourth quarter of fiscal 2015. Operating expenses, as a percentage of sales, dropped to 32.1% from 32.2% a year ago owing to higher legal expense in the prior-year quarter, partially offset by higher store payroll in the reported quarter.


AUTOZONE INC Price, Consensus and EPS Surprise

AUTOZONE INC Price, Consensus and EPS Surprise | AUTOZONE INC Quote

Fiscal 2016 Results

AutoZone reported a 13% rise in earnings per share to $40.70 for fiscal 2016 from $36.03 in the prior year. Earnings, however, missed the Zacks Consensus Estimate of $40.73. Net income went up 7% to $1.24 billion from $1.16 billion in fiscal 2015.

Annual revenues increased 4.4% year over year to $10.64 billion, but marginally missed the Zacks Consensus Estimate of $10.68 billion.

Store Opening and Inventory

AutoZone opened 71 stores in the U.S., 25 stores in Mexico, and 1 Interamerican Motor Corporation (“IMC”) branch during the quarter. Additionally, it relocated 2 stores in the U.S. As of Aug 27, 2016, the company had 5,297 stores in 50 states, the District of Columbia and Puerto Rico in the U.S., 483 stores in Mexico, 8 stores in Brazil and 26 IMC branches. Thus, the total store count was 5,814 as of that date.

AutoZone’s inventory grew 6.1% year over year in the quarter, driven by store openings and increased product placement. Inventory per store increased to $625,000 from the year-ago level of $610,000.

Share Repurchases

In fiscal 2016, AutoZone repurchased 1.9 million shares for $1.45 billion, reflecting an average price of $763 per share. The company had shares worth $395 million remaining for repurchase at the end of the year.

Financial Details

AutoZone had cash and cash equivalents of $189.7 million as of Aug 27, 2016, up from $175.3 million as of Aug 29, 2015. Total debt amounted to $4.92 billion as of Aug 27, 2016, compared with $4.62 billion as of Aug 29, 2015. The company had a stockholders’ deficit of $1.79 billion as of Aug 27, 2016, up from $1.70 billion as of Aug 29, 2015.

During fiscal 2016, AutoZone generated net cash flow of $1.17 billion before share repurchases and changes in debt compared with $1.02 billion in fiscal 2015. Capital spending increased to $488.8 million from $480.6 million a year ago.

Zacks Rank

Currently, AutoZone carries a Zacks Rank #3 (Hold). Some better-ranked automobile stocks include Spartan Motors Inc. SPAR, Superior Industries International, Inc. SUP and Cooper-Standard Holdings Inc. CPS. All these stocks sport a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

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