American retailer and distributor of automotive replacement parts and accessories AutoZone, Inc. (AZO) reported robust fourth-quarter and FY2021 results driven by a long-term disciplined approach to increasing operating earnings and cash flow. Shares jumped 3.6% on the news, closing at $1,643.07 on September 21.
The company reported fourth-quarter earnings of $35.72 per share, up 15.5% year-over-year and significantly higher than analysts’ estimates of $29.87 per share. (See AutoZone stock charts on TipRanks)
To add to that, quarterly net sales grew 8.1% compared to the year-ago period to $4.91 billion and meaningfully outpaced the Street’s estimate of $4.56 billion. Also, domestic same-store sales climbed 4.3% year-over-year. While the company’s retail business remained flat, its commercial business sales jumped 21.2% compared to the prior-year period.
For Fiscal 2021, net sales climbed 15.8% annually to $14.63 billion, and earnings increased 32.3% to $95.19 per share. Notably, AutoZone ended the year with 6,767 operational stores across the U.S., Mexico, and Brazil.
Commenting on the strong results, Bill Rhodes, Chairman, President, and CEO of AutoZone, said, “Our strong sales and earnings this quarter are a testament to our AutoZoners’ ongoing commitment to going the extra mile for our customers… The investments we are making continue to strengthen our competitive positioning in all the sectors and markets we compete. We are optimistic about our growth prospects heading into our new fiscal year.”
In response to AZO’s strong quarterly performance, Wells Fargo analyst Zachary Fadem lifted the price target on the stock to $1,825 (11.1% upside potential) from $1,750 while maintaining a Buy rating.
Fadem said, “All in, we see another impressive result and further evidence that DIFM investments are still resonating (+21.2% growth) despite inevitable DIY deceleration (-40bps). Looking to FY22, we see more gas in the tank, with positive sales growth still on the table and FQ1 estimates that already appear too low.”
The analyst attributed rising shareholder returns and attractive valuation for his optimistic view of the stock. Moreover, he believes that there is potential to boost share gains and growth opportunities from AutoZone’s commercial business, international presence in Mexico and Brazil, and fast-paced online sales platform.
Overall, the stock has a Moderate Buy consensus rating based on 5 Buys and 2 Holds. The average AutoZone price target of $1,741.43 implies 6% upside potential to current levels. Shares have gained 40.8% over the past year.
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