AutoZone’s Growth Isn’t Stopping Anytime Soon

910 Words2 Pages

There are many factors behind the continuous growth of AutoZone (AZO), an automotive aftermarket retailer, which is showing no signs of stopping anytime soon. Over the last year, the stock has returned 35.67% compared to 58.68% and 44.20%, respectively, for Advance Auto Parts (AAP) and O’Reilly Automotive (ORLY). Clearly AutoZone is an industry-laggard, however, below are a few reasons to remain optimistic on the stock. 30th-straight quarter of double digit EPS growth In the fiscal-second quarter that ended Feb. 14, the Memphis, Tennessee-based auto parts retailer reported net sales of $2 billion, an increase of 7.3% from the same period a year ago. Accordingly, domestic same-store sales increase 4.3% for the quarter. Net income for the quarter increased by as much as 9.4% - to $192.8 million – over the same period last year, while diluted earnings per share grew 18.8% to $5.63 per share, marking the thirtieth consecutive quarter of double digit earnings per share growth. These are remarkable figures by any means and reflect the company’s ability to sustain growth. http://nocache-phx.corporate-ir.net/phoenix.zhtml?c=76792&p=irol-newsArticle&ID=1905705&highlight= Average age of vehicles continues to rise According to a recent study by Polk, a global automotive market intelligence firm, the average age of all light vehicles on US roads is at an all-time high of 11.4 years. That compares to an average age of 8.4 and 9.6 years, respectively, in 1995 and 2002. In addition, Polk expects the trend to continue through 2016, while prices of vehicles in operation (VIO) decline providing greater incentive for customers to purchase used rather than new. The shift gives way to significant opportunities for certain automotive aftermarket se... ... middle of paper ... ... the fiscal-second quarter. Year to date, the auto parts retailer has bought back 1.082 million shares and had $727 million remaining under its current share repurchase authorization. Outlook for 2014 The company is expected to report a year-over-year revenue growth of 5.78% to $2.33 billion in the quarter ending May 14, according to consensus analysts’ estimates on Reuters. It is expected to grow per-share earnings by 16.23% to $8.45 in the quarter. For the full year 2014, the company is forecasted to report revenues of $9.49 billion and earnings of $11.28/share. Bottom line AutoZone has performed exceptionally well of the last several years and the industry trends indicate that the company will continue to perform well. Figuratively speaking, the company’s rearview mirror shows enormous past success, while windshield shows several opportunities down the road.

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