AutoZone Stays Neutral - Analyst Blog
13 Março 2013 - 3:02PM
Zacks
On Mar 10, we maintained our Neutral recommendation on
AutoZone Inc. (AZO), despite rising gas prices and
the company’s heavy reliance on its private label brands as we are
mainly encouraged with the company’s aggressive share repurchase
program, expansion of hub stores as well as better performance in
the second quarter of fiscal 2013.
Why Maintained?
AutoZone’s earnings increased 15.2% to $4.78 per share in the
second quarter of fiscal 2013 ended on Feb 9, 2013 from $4.15 in
the year-ago quarter. Earnings per share surpassed the Zacks
Consensus Estimate by 4 cents. AutoZone’s revenues for the quarter
increased 2.8% to $1.86 billion, marginally missing the Zacks
Consensus Estimate of $1.88 billion.
Following the release of the second quarter results, the Zacks
Consensus Estimate for fiscal 2013 decreased marginally by 0.1% to
$27.54 per share. The Zacks Consensus Estimate for fiscal 2014 also
went down 0.2% to $30.96 per share. Currently, AutoZone retains a
Zacks Rank #3 (Hold).
AutoZone aggressively focuses on store opening strategy every year.
In fiscal 2012, the company opened 72 new stores in the U.S and 24
new stores in Mexico. In the last quarter, AutoZone opened 32 new
stores in the U.S, and 9 new stores in Mexico. As of Feb 9, 2013,
the company had 4,735 stores in 49 states, the District of Columbia
and Puerto Rico in the U.S., 334 stores in Mexico and one store in
Brazil.
Advance Auto Parts Inc. (AAP), another leading
retailer and distributor of automotive replacement parts and
accessories, also pursues an aggressive store expansion strategy.
During the fourth quarter of 2012, it opened 67 stores, including 8
Autopart International stores. The company opened 137 stores in
2012, including 21 Autopart International stores.
AutoZone benefits from the rising demand for auto parts with the
growing age of vehicles on road. Revenues from Mexico benefited
from the abundance of old cars and a shortage of quality parts.
With this situation, AutoZone plans to gain market share by
category management efforts and supply-chain initiatives in the
retail segment.
However, we are concerned about rising gas prices, which have an
adverse impact on miles driven and lead to deferment of purchases
by the customers. In addition, AutoZone has a high degree of
reliance on its private label brands, which could hinder its
commercial business.
Other Stocks to Look For
Few stocks that are also performing well in the industry where
AutoZone operates are O’Reilly Automotive Inc.
(ORLY) and CarMax Inc. (KMX). O'Reilly is a Zacks
Rank #1 (Strong Buy) stock while CarMax is a Zacks Rank #2 (Buy)
stock.
ADVANCE AUTO PT (AAP): Free Stock Analysis Report
AUTOZONE INC (AZO): Free Stock Analysis Report
CARMAX GP (CC) (KMX): Free Stock Analysis Report
O REILLY AUTO (ORLY): Free Stock Analysis Report
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