Earnings Preview: AutoZone (AZO) likely to report higher Q4 sales and profit

AutoZone, Inc. (NYSE: AZO) is expected to publish fourth-quarter results on September 24, before the opening bell, with analysts forecasting strong growth in sales and profit. Over the years, there has been a consistent increase in quarterly revenues, driving stable earnings performance, as the company effectively tackles business challenges and constantly expands its store footprint.

AutoZone’s stock is maintaining an uptrend ahead of the earnings, and trades close to its March peak. Currently, it is one of the most expensive and best-performing stocks on Wall Street. The value has nearly doubled in the past three years. The relatively high share price reflects the company’s constant efforts to reduce the outstanding share count.

What to Look for

The aftermarket auto parts retail chain’s fourth-quarter report is slated for release on Tuesday, September 24, at 6:55 am ET. Analysts’ consensus estimate is for earnings of $53.81 per share on revenues of $6.24 billion compared to $46.46 per share and $5.69 billion, respectively, in the prior-year quarter. Over the past several years, the company has impressed its stakeholders with solid financial performance, with the bottom line regularly beating estimates.

AutoZone’s extensive store network gives it an edge over competitors like Advance Auto Parts. The company also benefits from its omnichannel capabilities and healthy inventory. While the management is cautious in the near-term outlook, it sees sales growth accelerating in the long term amid continued progress in initiatives within the domestic commercial business. The demand for automotive parts remains strong, supported by the thriving pre-owned vehicle industry, and the trend will continue as long as people purchase and use vehicles.

AutoZone’s CEO Phil Daniele said in a recent interaction with analysts, “We are focused on growing our domestic commercial business and we believe our improved customer service levels will lead to continued sales growth. We are also focused on our supply chain with two initiatives that are in flight to drive improved availability versus our expanded hub and mega hub rollouts and secondly, we are making good progress on adding capacity to our distribution network.”

Key Numbers

For the third quarter, the company reported net sales of $4.24 billion, an increase of 4% from the same period of fiscal 2023. The top line, meanwhile, fell short of expectations. Total same-store sales, or sales at domestic and international stores open at least one year, moved up 1.9% year-over-year.

Net income came in at $651.7 million or $36.69 per share in Q3, compared to $647.7 million or $34.12 per share a year earlier. In the early weeks of the quarter, sales were negatively impacted due to the timing of tax refunds, while the latter part was affected by the cooler-than-usual weather in several areas of the country.

After staying almost flat last week, AZO made modest gains in early trading on Monday. Around $3,132, the current value is well above the 12-month average price of $2,841.57.