AutoZone Beats Analysts’ Expectations in Q3

AutoZone (AZO), an American retailer of automotive parts and accessories, reported stronger-than-expected fiscal third quarter results. However, shares fell almost 2% on May 25.

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The company’s revenues of $3.7 billion surpassed the Street’s estimates of $3.26 billion and jumped 31.4% from the year-ago period.

Earnings came in at $26.48 per share, beating the consensus estimates of $20.14 per share and soared 84% year-over-year. The increase in earnings was driven by stronger commercial sales in the quarter.

Notably, domestic same store sales increased 28.9% in the fiscal third quarter.

AutoZone CEO Bill Rhodes said, “The investments we are making in Commercial pricing, service and assortment are strengthening our competitive position in this large, fragmented market. We intend to accelerate our Company’s historical Commercial growth rate as we increase our penetration in this market.”

He added, “While we understand sales trends will slow, we must work diligently during this fourth quarter to maintain the share gains we have achieved…Additionally, we remain committed to investing appropriately in a safe and productive environment for our customers and AutoZoners.” (See AutoZone stock analysis on TipRanks)

Following the fiscal Q3 earnings release, Oppenheimer analyst Brian Nagel assigned a Buy rating and a price target of $1,670 (17.6% upside potential).

Nagel commented, “We look very favorably upon recent trends at AZO and view accelerating sales and profitability at the company as reflective of management capitalizing successfully on economic re-opening tailwinds and consistent with our positive near- and longer-term calls on shares.”

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating. That’s based on 11 Buys, 2 Holds, and 1 Sell. The average analyst price target of $1,588.46 implies 11.8% upside potential to current levels. Shares have increased 26.9% over the past six months.