Is Auto Stock a Buy Before Earnings Report?

Is Auto Stock a Buy Before Earnings Report?

Posted On September 19, 2023 9:11 am

Renowned premier retailer and distributor of automotive replacement parts and accessories, AutoZone, Inc. (AZO), will unveil its fourth-quarter results before the stock market opens on Tuesday, September 19, 2023.

Analysts expect the company’s EPS and revenue to grow 11.7% and 4.9% year-over-year to $45.23 and $5.61 billion, respectively.

AZO initially cemented its reputation as the inaugural retailer, providing an expansive inventory of automotive parts. Its sustained emphasis on exceptional customer service, convenient shopping experiences, and diverse product offerings underpins its position at the forefront of auto part retail.

The company harnesses its unique value proposition in the sector, combining remarkable customer service with complementary services and efficient supply chain management. This strategic approach fostered an enduring track record of substantial returns.

During the quarter ended May 6, 2023, AZO inaugurated 22 new stores in the U.S., along with six in Mexico and two in Brazil.

AZO’s Auto Parts Stores segment revenue, accounting for a striking 98.2% of overall revenue, experienced a 5.8% growth year-over-year, equating to $4.02 billion for the same quarter. This division comprises retail and distribution of automotive parts via physical stores operating across the U.S., Mexico, and Brazil.

Each outlet presents an extensive range of products for various vehicles, stretching from new to remanufactured hard parts to various maintenance items, accessories, and non-vehicle products.

AZO’s capital allocation policy exalts high return rates from cash flow reinvestment, with the surplus channeled towards share repurchases. Over time, this approach resulted in a stark 80% share count decrease over the past years.

AZO’s prodigious share buyback initiative has drawn significant attention since the beginning of the millennium. Following May 6, 2023, and through June 2, 2023, the company repurchased 86.7 thousand shares of its common stock at an aggregate cost of $219.9 million.

AZO’s growth trajectory is marked by a dual-pronged strategy that encourages organic expansion of its store network while simultaneously facilitating growth through targeted acquisitions.

This industry giant further bolsters its portfolio by prioritizing commercial sales that include collaborations with professional clients such as auto repair shops and fleet operators. Demonstrating a judicious approach to…

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