AutoZone Inc. (AZO) defied expectations with third-quarter fiscal 2024 earnings coming in at $36.69 per share, a robust 7.5% increase from the previous year. The earnings outperformed the Zacks Consensus Estimate of $35.72 per share. However, the company fell short in sales, with net sales growing by 3.5% year over year to $4,235.5 million, just missing the Zacks Consensus Estimate of $4,292 million.
In the same quarter, domestic commercial sales showed strength, totaling $1.14 billion, marking an increase from the previous year. Domestic same-store sales remained steady.
Notably, gross profit saw a jump to $2.26 billion, reflecting an uptick from the previous year. Operating profit also increased by 4.8% year over year, reaching $900 million.
Looking at Store Expansion and Inventory
During the quarter, AutoZone expanded its footprint by opening 32 new stores in the United States along with 12 in Mexico and one in Brazil. As of May 4, 2024, the company operated a total of 7,236 stores across its key markets.
Moreover, the company’s inventory swelled by 8% year over year. At the close of the quarter, the inventory per store stood at $851,000, compared to $810,000 a year earlier.
Financial Overview and Share Buybacks
AutoZone’s financial position saw cash and cash equivalents at $275.4 million as of May 4, 2024, although slightly down from the previous year. However, total debt rose to $8.5 billion compared to $7.67 billion in the previous year.
The company utilized $737.7 million to repurchase 242,000 shares of its common stock during the fiscal third quarter, with an average price of $3,036 per share. It maintained $1.4 billion for future share repurchases at quarter-end.
Analyzing Zacks Rank & Key Picks
Autozone currently holds a Zacks Rank #3 (Hold). In the auto sector, some other promising players include Blue Bird Corp. (BLBD), Oshkosh Corp (OSK), and Ford (F).
Zacks Consensus Estimates show significant growth prospects for BLBD and OSK, with their EPS and sales expected to rise in the coming years. Blue Bird Corp. receives a Zacks Rank #1 (Strong Buy) acknowledgment, reflecting its promising future outlook.
Similarly, F’s revenue is anticipated to grow as per Zacks Consensus Estimate, indicating a positive trajectory ahead. Ford is currently rated a Zacks Rank #2 (Buy), showing favorable sentiment in the market.