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Autozone (AZO) |
HenryTo
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 Posted: Wed Dec 09, 2009 12:51 am Post subject: Autozone (AZO) |
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Morningstar's latest notes on AZO's earnings:
| Quote: | | AutoZone's AZO first-quarter results were in-line with our projections. We're maintaining our fair value estimate. Total revenue increased 7.5%, driven by incremental sales from new stores and a 5.6% rise in same-store sales. This can be partially attributed to weak comparisons, given that the firm lapped a 1.5% decline in same-store sales during the prior-year period. However, we believe AutoZone also benefited from more consumers performing do-it-yourself vehicle maintenance, given that the number of off-warranty vehicles is at an all-time high. Additionally, we were encouraged that parts sales to professional installers and repair garages were up 7.7% for the quarter, suggesting that the firm's commercial program is gaining traction and benefiting from incremen tal business following the closure of automotive dealerships. However, top-line growth will probably decelerate through the rest of the year, as the firm comes up against difficult year-over-year comparisons. The quarterly operating margin was 16.4%, up slightly from 16.1% during the prior-year period, as the firm benefited from lower distribution costs, supply chain efficiencies, and leverage gained through spreading fixed costs over a larger sales base. This was partially offset by an increase in pension expense, and additional costs related to the roll-out of hub stores. Operating margins will likely contract during the next few quarters, due to incremental investments in the commercial business. For the full year, we project that the operating margin will be just south of 7.0%, versus 7.3% during fiscal 2009. |
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Autozone (AZO) Replies |
HenryTo
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Joined: 06 Aug 2004
Posts: 11722
Location: Los Angeles, California
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| Posted: Tue Dec 06, 2011 12:45 pm Post subject: |
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Morningstar on AZO's fiscal 1Q earnings.
| Quote: | | AutoZone AZO reported positive first-quarter results that were within our expectations, and we expect to keep our $305 fair value estimate intact. New-car sales have picked up recently and have exceeded a 13 million seasonally adjusted annual rate for the past three months, but remain below the 14 million SAAR necessary to reduce the size of the older vehicle fleet. As a result, AutoZone and other auto part retailers continue to benefit from the increasing age of the average vehicle, which recently hit a record high of almost 11 years. Although we like the competitive positioning of AutoZone's do-it-yourself segment in the attractive auto part retail industry, we think the shares are moderately overvalued. Auto part retailers have taken advantage of elevated demand for auto parts to boost margins to record highs, and we think margins could come under pressure if cyclical tailwinds reverse as new vehicle sales pick up. There is additional upside if economic weakness continues to depress new-vehicle sales, but we think investors should wait for a more opportunistic entry point. Year over year, the top line grew 7.4% to $1.92 billion, driven by a 4.6% domestic comp and the addition of 187 net new stores over the past 12 months. Commercial programs are now established in about 60% of AutoZone's domestic stores (up from 56% in the prior year), helping commercial sales grow 22.6% to $273 million. Gross margins improved 40 basis points to 51.1% as a result of lower distribution costs, lower shrink expense, and slightly higher merchandise margins. In combination with 20 basis points of selling, general, and administrative expense leverage, the operating margin grew 60 basis points to 17.7%. Management repurchased 954 thousand shares at a total cost of $310 million in the quarter and has $659 million remaining under its current share-repurchase authorization. For calendar 2012, we expect revenue to grow about 7% and operating margins to come in at about 18.5%. |
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HenryTo
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Posts: 11722
Location: Los Angeles, California
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| Posted: Tue Mar 01, 2011 12:09 pm Post subject: |
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Morningstar on AZO's 2Q earnings. Note that the average age of a vehicle in the US is now at an all-time high of 10.3 years:
| Quote: | | AutoZone's AZO second-quarter results reflected healthy demand for parts and increased penetration in the commercial market. Results came in slightly ahead of our projections, but not enough to alter our fair value estimate. Additionally, we believe that demand for auto replacement parts should moderate in the near term as new-vehicle sales pick up. Therefore, though AutoZone shares are not overly expensive (forward fiscal-year price/earnings of 15 times, enterprise value/EBITDA of 9.6 times), we would advise investors to wait for a more opportunistic entry point. Total quarterly revenue increased 10.3% to $1.7 billion, driven by incremental sales from new stores and a 7.1% rise in same-store sales. We believe AutoZone benefited from more consumers performing their own vehicle maintenance, given that the number of off-warranty vehicles and the average age of vehicles on the road (10.3 years) are at all-time highs. Additionally, we were encouraged that the firm's commercial program is gaining traction and benefiting from incremental business following the closure of automotive dealerships during the downturn. (Parts sales to professional installers and repair garages were up 21% for the quarter.) Thanks to solid sales volume, the operating margin expanded by 110 basis points to 16.4%, the result of leverage gained through spreading fixed costs over a larger sales base. A mix shift toward higher-margin private-label sales and lower shrink expense also lifted margins. This was partially offset by an increase in compensation and advertising expenditures and additional costs related to the rollout of hub stores. Over the next few quarters, however, we estimate that revenue growth will decelerate, as demand for auto replacement parts should moderate as new-vehicle sales accelerate in a more stable economic environment. Additionally, the firm will be lapping difficult comparisons, with same-store sales growth averaging in the mid- to high single digits over the past two years. We project that AutoZone will deliver modest operating margin expansion in 2011 (to about 18%), as increased penetration in private-label brands more than makes up for decelerating top-line growth and a mix shift toward lower-margin commercial sales. |
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HenryTo
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Posts: 11722
Location: Los Angeles, California
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| Posted: Tue Sep 21, 2010 9:58 am Post subject: |
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Morningstar on AZO's 4Q earnings:
| Quote: | | AutoZone's AZO fourth-quarter results reflected healthy demand for parts and increased penetration in the commercial market. While results came in slightly ahead of our projections, the change was not material enough to alter our fair value estimate. Total quarterly revenue increased 9.5% to $2.4 billion, driven by incremental sales from new stores and a 6.7% rise in same-store sales (on top of solid 5.4% comparable sales growth in the prior year). We believe AutoZone continued to benefit from more consumers performing do-it-yourself vehicle maintenance, given that the number of off-warranty vehicles and the average age of ve hicles on the road (10.2 years) are at all-time highs. Additionally, we were encouraged that the firm's commercial program is gaining traction and benefiting from incremental business following the closure of automotive dealerships during the downturn. (Parts sales to professional installers and repair garages were up 20% for the quarter.) Given solid sales volume, the quarterly operating margin expanded to 19.3% from 18.7% in the prior-year, as the firm benefited from supply-chain efficiencies and leverage gained through spreading fixed costs over a larger sales base. This was partially offset by an increase in pension expense and additional costs related to the rollout of hub stores. Over the next year, however, we estimate that revenue growth will decelerate, as demand for auto replacement parts will probably moderate as new vehicle sales accelerate amid a more stable economic environment. Additionally, the firm will be lapping two years of difficult comparisons (4.4% in fiscal 2009 and 5.4% in 2010). Coupling decelerating top-line growth with a mix shift toward lower-margin commercial sales, we project that the operating margin in 2011 will be just shy of the 17.9% delivered this year. |
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