Shares of AutoZone (AZO, Financial) were trading at $3001.48, down 1.55% today after the company reported misses on both the top and bottom lines for its fiscal fourth quarter.
AutoZone reported $6.2 billion in sales, close to analysts' forecasts, but its earnings fell short at $51.58 per share compared to the expected $53.53. For the quarter ending August 31, sales grew by 9% year over year. However, this quarter included an extra week compared to last year's Q4. Without this extra week, revenues would have increased by only 2.6%.
Contributing to the sales growth were 68 new store openings in the U.S., 31 in Mexico, and 18 in Brazil. Despite this expansion, same-store sales for the quarter increased only 0.7%, with most growth occurring outside the U.S. On the profitability front, gross profit margins decreased by 21 basis points, and operating costs rose by 40 basis points, leading to operating profits growing at a slower rate of 6% compared to sales growth.
AutoZone's stock repurchase program was a bright spot, having bought back approximately $710 million worth of stock during Q4 at an average price of $2,915 per share. This was nearly a 5% discount to the current stock price, resulting in an 11% year-over-year boost in per-share profit, outpacing sales growth.
From a valuation perspective, AutoZone (AZO, Financial) has a price-to-earnings (P/E) ratio of 20.76, which is close to its 10-year high. The company's GF Value stands at $3,030.13, making the stock fairly valued according to GuruFocus metrics. You can explore more on AutoZone's GF Value page.
The stock's one-year price change is up 16.47%, and its price change year-to-date is 15.93%. However, the stock has seen some recent weakness with a -7.47% change over the past 24 weeks. Despite these fluctuations, AutoZone's five-year earnings growth rate remains robust at 22.5%, and its operating margin is expanding, signaling strong profitability.
In terms of debt, AutoZone has an acceptable level of long-term debt but has been issuing new debt over the past three years. Its Altman Z-Score of 2.62 places the company in the grey area, indicating some financial stress. However, the Beneish M-Score of -2.57 suggests that the company is unlikely to be manipulating its financial statements.
Overall, AutoZone (AZO, Financial) continues to show predictable revenue and earnings growth, supported by its strong operating margins and strategic stock repurchases.
