AutoZone, Inc. (NYSE:AZO) Analysts' Positive Outlook and Stock Performance

AutoZone (NYSE:AZO) delivered a mixed financial performance in its second-quarter earnings report, with revenue slightly exceeding analyst expectations while earnings came in below projections.

For the quarter, AutoZone reported net sales of $4 billion, marking a 2.4% year-over-year increase and edging past the consensus estimate of $3.98 billion. However, adjusted earnings per share fell short at $28.29, missing the forecasted $29.06.

Same-store sales saw a modest uptick of 0.5%, with domestic locations performing better than international ones. U.S. same-store sales rose 1.9%, while international same-store sales declined 8.2%, largely due to unfavorable currency exchange rates. Adjusting for currency fluctuations, international sales actually grew 9.5%.

Despite the revenue growth, profitability faced headwinds. Gross profit margin remained steady at 53.9%, but operating profit fell 4.9% to $706.8 million, while net income slipped 5.3% to $487.9 million.

The company continued its expansion strategy, adding 45 net new stores during the quarter, bringing its total count to 7,432 across the U.S., Mexico, and Brazil. Additionally, AutoZone repurchased 100,000 shares for $329.4 million, with $1.3 billion still available under its current share repurchase program.

Looking ahead, AutoZone remains optimistic about its momentum going into the second half of the fiscal year, highlighting its strategic focus on strengthening both DIY and commercial sales as it prepares for peak seasonal demand in the spring and summer months.

AutoZone, Inc. (NYSE:AZO) is a leading retailer and distributor of automotive replacement parts and accessories in the United States. The company operates in the Zacks Automotive - Retail and Wholesale - Parts industry, competing with other major players like O'Reilly Automotive and Advance Auto Parts. AutoZone's business model focuses on providing a wide range of products for both professional mechanics and do-it-yourself customers.

On March 4, 2025, AutoZone reported earnings per share (EPS) of $28.29, which was below the estimated $29.05. This represents a negative surprise of 2.98%, as highlighted by Zacks. The EPS also decreased from $28.89 in the same quarter last year. In the previous quarter, AutoZone reported an EPS of $32.52, missing the expected $33.54, resulting in a 3.04% negative surprise. Over the past four quarters, AutoZone has exceeded consensus EPS estimates only once.

AutoZone's revenue for the quarter ending February 2025 was $3.95 billion, slightly below the estimated $3.98 billion, marking a 0.89% shortfall according to Zacks. Despite this, the revenue showed a slight increase from $3.86 billion reported a year ago. The company has surpassed consensus revenue estimates only once in the last four quarters. AutoZone's stock declined following its fourth consecutive revenue miss, despite strong performance in the U.S. market.

The company faces challenges from cautious consumer spending and currency rate fluctuations, impacting its ability to meet revenue expectations. AutoZone's international business, however, continues to perform well and remains a source of encouragement. The company's price-to-earnings (P/E) ratio is approximately 22.02, indicating the market's valuation of its earnings, while its price-to-sales ratio is about 3.10, reflecting the market's valuation of its revenue.

AutoZone's financial metrics provide insights into its valuation and financial health. The enterprise value to sales ratio is around 3.74, and the enterprise value to operating cash flow ratio is approximately 23.28. The earnings yield is about 4.54%, offering a perspective on the return on investment. The company has a negative debt-to-equity ratio of approximately -0.70, suggesting a higher level of liabilities compared to its equity. Additionally, AutoZone's current ratio is approximately 0.83, indicating its ability to cover short-term liabilities with short-term assets.

AutoZone, Inc. (NYSE:AZO) is a leading retailer and distributor of automotive replacement parts and accessories in the United States. The company is known for its extensive product range and strong customer service. AutoZone competes with other major players in the automotive parts industry, such as Advance Auto Parts and O'Reilly Automotive.

AutoZone is set to release its quarterly earnings on December 10, 2024, with analysts estimating an earnings per share (EPS) of $33.60. This represents a 3.2% increase from the same period last year, as highlighted by the stability in earnings estimates over the past 30 days. This stability is crucial as it often influences investor reactions and short-term stock price movements.

The company's revenue is projected to reach approximately $4.31 billion, reflecting a 2.6% rise from the previous year's quarter. AutoZone's price-to-earnings (P/E) ratio of 21.13 suggests that the market values its earnings relatively high. The price-to-sales ratio of 3.02 and enterprise value to sales ratio of 3.67 further indicate the market's positive valuation of its revenue and sales.

AutoZone's financial metrics provide additional insights into its valuation. The enterprise value to operating cash flow ratio of 22.61 highlights the company's cash flow efficiency. The earnings yield of 4.73% offers a perspective on the return on investment for shareholders. However, the debt-to-equity ratio of -1.98 suggests a higher level of debt compared to equity, which could be a concern for some investors.

The company's current ratio of 0.84 indicates its ability to cover short-term liabilities with short-term assets. This ratio is an important measure of liquidity, showing that AutoZone may face challenges in meeting its short-term obligations. As the earnings report approaches, these financial metrics will be closely watched by investors and analysts alike.

Goldman Sachs analysts downgraded AutoZone (NYSE:AZO) to Sell from Neutral, adjusting their price target on the stock down to $2,917 from $3,205. The shift reflects a strategic reallocation toward companies more aligned with discretionary goods, where Goldman expects stronger growth as interest rates stabilize and consumer spending diversifies.

The analysts outlined several concerns about AutoZone’s outlook, beginning with a strain on lower-income consumers, who form a substantial part of AZO's customer base. This demographic is likely to remain under financial pressure through 2025. Additionally, with car prices normalizing, the analysts anticipate a potential dip in repair demand, impacting AutoZone's core revenue.

Customer sentiment metrics for AutoZone have also shown decline, with the brand’s NPS and NPI scores nearing three-year lows, according to HundredX data. Furthermore, Goldman Sachs sees potential financial strain as the company faces upcoming 2025 debt obligations, raising concerns about interest expenses and the impact on stock buybacks.

The valuation analysis points to elevated levels for AZO shares, which Goldman finds hard to justify amid slower growth and heightened risks.

AutoZone (NYSE:AZO) reported its fourth-quarter earnings, falling short of analyst expectations and leading to a more than 2% drop in its stock intra-day today.

The auto parts retailer posted adjusted earnings per share of $48.11 for the quarter, missing the Street estimate of $53.61. Revenue for the quarter reached $6.2 billion, slightly below the expected $6.23 billion, though it marked a 9.0% year-over-year increase.

Same-store sales for the quarter grew by 0.7% over a 16-week period, with domestic same-store sales edging up just 0.2%. AutoZone pointed to ongoing challenges in its discretionary merchandise categories, which have faced deferrals, as a key factor affecting performance. Phil Daniele, AutoZone's President and CEO, acknowledged the headwinds but noted that the company's Commercial sales showed improving momentum.

For the full fiscal year 2024, AutoZone reported $18.5 billion in sales, up 5.9% from the prior year. Earnings per share grew by 13.0%, reaching $149.55.

TD Cowen analysts reaffirmed a Buy rating on AutoZone (NYSE:AZO), maintaining a price target of $3,450.

The analysts highlighted three key points following a meeting with AutoZone's CFO. First, they noted that the immediate market conditions remain tough for both the DIY (Do It Yourself) and DIFM (Do It For Me) segments, although the fundamental long-term drivers in the industry are still robust. Second, the analysts expressed optimism that investments in the DIFM channel are expected to spur growth over time. Third, while there may be pressure on gross margins in fiscal year 2025, the longer-term outlook suggests margins should be stable or slightly positive.