AutoZone (NYSE:AZO) Reports Q3 In Line With Expectations
Auto parts and accessories retailer AutoZone (NYSE:AZO) met Wall Street’s revenue expectations in Q3 CY2024, with sales up 9% year on year to $6.21 billion. Its GAAP profit of $51.58 per share was 3.4% below analysts’ consensus estimates.
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AutoZone (AZO) Q3 CY2024 Highlights:
- Revenue: $6.21 billion vs analyst estimates of $6.22 billion (in line)
- EPS: $51.58 vs analyst expectations of $53.41 (3.4% miss)
- Gross Margin (GAAP): 52.5%, in line with the same quarter last year
- EBITDA Margin: 23.7%, in line with the same quarter last year
- Free Cash Flow Margin: 11.7%, similar to the same quarter last year
- Locations: 7,353 at quarter end, up from 7,140 in the same quarter last year
- Same-Store Sales were flat year on year (4.5% in the same quarter last year) (miss vs. expectations of up 1% year on year)
- Market Capitalization: $52.08 billion
Company Overview
Aiming to be a one-stop shop for the DIY customer, AutoZone (NYSE:AZO) is an auto parts and accessories retailer that sells everything from car batteries to windshield wiper fluid to brake pads.
Auto Parts Retailer
Cars are complex machines that need maintenance and occasional repairs, and auto parts retailers cater to the professional mechanic as well as the do-it-yourself (DIY) fixer. Work on cars may entail replacing fluids, parts, or accessories, and these stores have the parts and accessories or these jobs. While e-commerce competition presents a risk, these stores have a leg up due to the combination of broad and deep selection as well as expertise provided by sales associates. Another change on the horizon could be the increasing penetration of electric vehicles.
Sales Growth
AutoZone is one of the larger companies in the consumer retail industry and benefits from economies of scale, enabling it to gain more leverage on fixed costs and offer consumers lower prices.
As you can see below, the company’s annualized revenue growth rate of 9.3% over the last five years was mediocre as it opened new stores and grew sales at existing, established stores.
This quarter, AutoZone’s revenue grew 9% year on year to $6.21 billion, missing Wall Street’s expectations. Looking ahead, Wall Street expects sales to grow 3.7% over the next 12 months, a deceleration from this quarter.
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Same-Store Sales
Same-store sales growth is an important metric that tracks demand for a retailer’s established brick-and-mortar stores and e-commerce platform.
AutoZone’s demand within its existing stores has generally risen over the last two years but lagged behind the broader consumer retail sector. On average, the company’s same-store sales have grown by 4% year on year. With positive same-store sales growth amid an increasing physical footprint of stores, AutoZone is reaching more customers and growing sales.
In the latest quarter, AutoZone’s year on year same-store sales were flat. By the company’s standards, this growth was a meaningful deceleration from the 4.5% year-on-year increase it posted 12 months ago. We’ll be watching AutoZone closely to see if it can reaccelerate growth.
Key Takeaways from AutoZone’s Q3 Results
We struggled to find many strong positives in these results. Its revenue, gross margin, and EPS all missed Wall Street’s estimates. Overall, this was a weaker quarter. The stock traded down 3.2% to $2,955 immediately following the results.
AutoZone’s latest earnings report disappointed. One quarter doesn’t define a company’s quality, so let’s explore whether the stock is a buy at the current price. What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock.We cover that in our actionable full research report which you can read here, it’s free.
