AutoZone (NYSE: $AZO) released its fourth-quarter and full year fiscal 2024 earnings results on Tuesday, September 24 before markets opened. Following the earnings miss, investors reacted negatively.
AutoZone Misses Estimates in Q4 Results
For the fourth quarter of fiscal 2024, AutoZone reported revenue of $6.2 billion, a 9% YoY increase, and in line with estimates of $6.22 billion. Earnings grew 11% year over year to $51.58 per share, below expectations of 54.03 per share.
Other Financial Highlights
AutoZone reported a 21 bps decrease in its gross margin to 52.5% due to a 53 bps reduction in the LIFO benefit compared to a $30 million LIFO benefit last year. Meanwhile, the Operating Expense Ratio (OER) came in at 31.6% compared to 31.2% the previous year.
The company reported opening 117 new stores across the US, Mexico, and Brazil. For the full year, it opened 213 new stores. It ended the year with 7,353 stores spread out across the US, Mexico, and Brazil.
Full Year Fiscal 2024 Results
AutoZone reported a full-year fiscal 2024 revenue of $18.5 billion, a 5.9% increase YoY, in line with estimates of $18.51. The full-year EPS came in at $149.55, a 13% YoY increase, but below estimates of $151.58 per share.
The full-year gross margin rose to 53.1% compared to 52% the previous year, driven by a non-cash net LIFO favorability of 47 bps or $84 million net. The full-year Operating Expense Ratio (OER) came in at 32.6% compared to 32.1% the previous year.
Share Buyback
During the fourth quarter, AutoZone bought back $710.6 million worth of shares at an average price of $2,915 per share. For the full year, the company bought back $3.2 billion worth of shares at an average of $2,759 per share.
Since the beginning of the share buyback program, AutoZone has bought back $37.0 billion worth of shares at an average price of $238 per share. It has $2.2 billion remaining under its existing share buyback program.
Commenting on the results, AutoZone CEO Phil Daniele said, “As we continue to invest in our business, we will remain committed to our disciplined approach of increasing earnings and cash flow, all while delivering strong shareholder value.”
AutoZone (AZO) Sinks After Q4 Results
Following the earnings miss, AutoZone shares sank 2.95% in pre-market trading to $2,959.00 per share. Year to date, the stock is up 17.9%, while in the past 12 months, its up 18.62%. It has underperformed the market, with the S&P 500 rising 19.6%, and 32% year to date, and the past 12 months, respectively. Over the past month, AZO share have dipped 2.5%, while the S&P 500 has risen ½% during the same period.
Analysts remain optimistic about AZO shares, forecasting a wide range of price targets, with a high of 3,450.00 and a low of $2,600. Their average price forecast of $3,178.43 is a 4.25% upside based on Monday’s closing price of 3,048.82.
Is AutoZone A Buy?
Despite missing earnings estimates in the latest results, AutoZone has reported record revenues for 34 consecutive years. Its business model of selling after-market parts makes it a resilient stock, even during market downturns.
For example, during the 2008 financial recession, the company reported 5% growth in revenue in fiscal 2009, which rose to 8% growth in fiscal 2010. One reason for this is that during financial downturns, people tend to hold off on new purchases, opting to shell out more on repairs.
Consequently, as part of a long-term investment strategy, AutoZone could potentially be a lucrative investment.
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