AutoZone (AZO) has posted earnings per share of $2.46 per share for the second quarter ended February 13, 2010, beating the Zacks Consensus Estimate of $2.35 per share. The earnings also improved from the year-ago level of $2.03 per share.
Net sales in the quarter rose 4% to $1.5 billion. Domestic same store sales (sales for stores open at least one year) increased 1% for the quarter. Gross profit, as a percentage of sales, went up to 50% from 49.7% in the last year’s quarter. The improvement in gross margin was attributable to a shift in mix of sales to higher margin product and lower product acquisition costs.
AutoZone’s inventory increased 3.3% due to the new store openings. Inventory per store was $504 thousand versus $509 thousand last year. However, net inventory (merchandise inventories less accounts payable) decreased on a per store basis to $26,000 from $50,000 last year.
During the quarter, AutoZone opened 24 new stores in the U.S. and 9 new stores in Mexico. As of February 13, 2010, the company had 4,289 stores in 48 U.S. states, the District of Columbia and Puerto Rico, and 202 stores in Mexico.
Under its share repurchase program, AutoZone repurchased 565,000 shares of its common stock for $88 million during the quarter, at an average price of $155 per share. The company has $517 million remaining under its current share repurchase authorization.
AutoZone had cash and cash equivalents of $105 million as of February 13, 2009. Total debt amounted to $2.77 billion as on that date. The company had a stockholder deficit of $422 million as of the above period. In the quarter, the company had a net cash flow of $78 million before share repurchases and changes in debt.
Estimate Revisions Trend
Over the last 30 days, out of the 26 analysts covering the stock, 6 analysts have upwardly revised estimates for full year 2010, while only one analyst has revised it downward. In the absence of any upward or downward revision of estimate from a majority of analysts, our long-term recommendation on the stock remains Neutral (Zacks #3 Rank).
With respect to earnings surprises, the stock has performed moderately well over the trailing four quarters. Its average earnings surprise was 5.23% over that time period.
The current Zacks Consensus Estimates for the third quarter and full-year 2010 are profits of $3.51 per share and $13.64 per share, respectively. The upside potential of these estimates, essentially a proxy for future earnings surprises, currently stands at plus 0.86% and minus 0.22%, respectively.
Based on the improved results, AutoZone’s stock price escalated about 1.3% to over $168 per share just after mid-day trading.
Read the full analyst report on “AZO”
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