AutoZone (AZO), a leading automotive parts retailer, is roaring despite a slow-moving U.S. economy. The retailer has been ringing up sales growth as consumers spend more on repair and maintenance to keep older vehicles on the road.
AutoZone believes it is benefiting from a shift in consumer preference toward getting more mileage from the vehicles they already own and away from buying new models. That frugality among motorists, in turn, has helped the Memphis, Tenn. retailer reap increases in both net income and net sales every year since 2007. The company, which began operations in 1979, has more than 4,000 stores in the United States and Puerto Rico and more than 200 in Mexico.
AutoZone reported net sales of $5.43 billion in the nine months ended May 7, up 10.4 percent from the prior comparable period. Net income in the nine-month period rose to $547 million, a 16.6 percent increase compared with the previous fiscal year.
Earnings per diluted share in the three-quarter period also rose, year over year, to $12.35 from $9.37.
Most of Wall Street is in “park” on AutoZone. Hardly a penny stock, AutoZone shares have traded at prices well in excess of $200 in the last 12 months. The majority of analysts following the company in early August had neutral ratings on the stock, recommending neither accumulation nor disposal at prices around $280.
Sentiment among AutoZone and its rivals appeared to worsen in spring. A monthly index of the confidence of business leaders in the automotive aftermarket declined sharply in May from the April level.
A Bethesda, Md. trade group called the Automotive Aftermarket Industry Association reported July 12 that its May index showed "automotive business leaders were less confident about the economy as a whole." AutoZone next reports in late September.
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