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This Leading Auto Company Has Navigated the Bear Market with Ease
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A counter-trend rally has begun to take shape, as the historically bullish fourth quarter has started out with a bang. October has witnessed the S&P 500 return about 7%, living up to its reputation as the best month in midterm years. While the major trend in stocks remains down, certain companies have navigated this difficult market environment better than others.
One such company is AutoZone (AZO - Free Report) , a leading retailer and distributor of automotive replacement parts and accessories. One of the great stock market stories over the past several decades, the company provides various components for cars, utility vehicles, vans, and light trucks. Its products include familiar vehicle parts such as batteries, A/C compressors, belts and hoses, fuel pumps, fuses, starters, and thermostats.
AZO maintains stores in the U.S., Puerto Rico, Mexico and Brazil, operating approximately 6,800 locations. In addition to storefronts, AutoZone also sells its products and accessories through several websites including AutoZone.com. The stock is currently hitting an all-time high, a sign of strength as most stocks continue to hover in bear market territory.
Part of the Zacks Automotive – Retail and Wholesale – Parts industry which ranks in the top 33% of all industry groups, AZO sports a highest-possible rating of ‘A’ in each of our Zacks Growth, Momentum, and overall VGM Style Score categories. This top score indicates AZO’s growth prospects are still enticing and its financial strength is sound.
Quantitative research studies suggest that about half of a stock’s price appreciation is due to its industry grouping. By investing in stocks in the top-performing industry groups, investors can add a ‘tailwind’ to their trading success. Let’s take a deeper look at this leading company.
Sales and Earnings Trends
In fiscal 2022, AZO reported an 11.1% year-over-year increase in net revenues to $16.3 billion, with domestic same store sales rising 8.4%. The company’s sustained revenue growth is striking as it has generated record sales for 25 consecutive years. The replacement part company also generated net income of $2.4 billion during the most recent fiscal year, up 11.9% on a year-over-year basis.
Image Source: Zacks Investment Research
The AZO growth engine is expected to remain hot this year as analysts have increased their fiscal 2023 EPS estimates by 1.62% in the past 60 days. The Zacks Consensus Estimate now stands at $125.22/share, representing growth of 6.85% relative to fiscal ’22. Sales are seen climbing by 4.88% to $17.05 billion.
AZO has established a healthy track record of earnings surprises as the firm has surpassed estimates in each of the past four quarters, with an average earnings surprise of 16.59% over that timeframe. The stock has performed admirably this year and is up nearly 20% - widely outperforming the market.
Image Source: Zacks Investment Research
What the Zacks Model Unveils
The Zacks Earnings ESP (Expected Surprise Prediction) identifies companies that have recently witnessed positive earnings estimate revision activity. The idea is that this more recent information can serve as a better predictor of the future, giving investors a leg up during earnings season. When combining a Zacks Rank #3 or better with a positive Earnings ESP, stocks produced a positive surprise 70% of the time according to our 10-year backtest.
With an Earnings ESP +6.29% and a Zacks Rank #3 (Hold) rating, another earnings beat may be in the cards for AZO investors when the company reports fiscal Q1 results on December 6th.
Make sure to keep an eye on AZO as the stock looks primed to continue its dominant trend.
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This Leading Auto Company Has Navigated the Bear Market with Ease
A counter-trend rally has begun to take shape, as the historically bullish fourth quarter has started out with a bang. October has witnessed the S&P 500 return about 7%, living up to its reputation as the best month in midterm years. While the major trend in stocks remains down, certain companies have navigated this difficult market environment better than others.
One such company is AutoZone (AZO - Free Report) , a leading retailer and distributor of automotive replacement parts and accessories. One of the great stock market stories over the past several decades, the company provides various components for cars, utility vehicles, vans, and light trucks. Its products include familiar vehicle parts such as batteries, A/C compressors, belts and hoses, fuel pumps, fuses, starters, and thermostats.
AZO maintains stores in the U.S., Puerto Rico, Mexico and Brazil, operating approximately 6,800 locations. In addition to storefronts, AutoZone also sells its products and accessories through several websites including AutoZone.com. The stock is currently hitting an all-time high, a sign of strength as most stocks continue to hover in bear market territory.
Part of the Zacks Automotive – Retail and Wholesale – Parts industry which ranks in the top 33% of all industry groups, AZO sports a highest-possible rating of ‘A’ in each of our Zacks Growth, Momentum, and overall VGM Style Score categories. This top score indicates AZO’s growth prospects are still enticing and its financial strength is sound.
Quantitative research studies suggest that about half of a stock’s price appreciation is due to its industry grouping. By investing in stocks in the top-performing industry groups, investors can add a ‘tailwind’ to their trading success. Let’s take a deeper look at this leading company.
Sales and Earnings Trends
In fiscal 2022, AZO reported an 11.1% year-over-year increase in net revenues to $16.3 billion, with domestic same store sales rising 8.4%. The company’s sustained revenue growth is striking as it has generated record sales for 25 consecutive years. The replacement part company also generated net income of $2.4 billion during the most recent fiscal year, up 11.9% on a year-over-year basis.
Image Source: Zacks Investment Research
The AZO growth engine is expected to remain hot this year as analysts have increased their fiscal 2023 EPS estimates by 1.62% in the past 60 days. The Zacks Consensus Estimate now stands at $125.22/share, representing growth of 6.85% relative to fiscal ’22. Sales are seen climbing by 4.88% to $17.05 billion.
AZO has established a healthy track record of earnings surprises as the firm has surpassed estimates in each of the past four quarters, with an average earnings surprise of 16.59% over that timeframe. The stock has performed admirably this year and is up nearly 20% - widely outperforming the market.
Image Source: Zacks Investment Research
What the Zacks Model Unveils
The Zacks Earnings ESP (Expected Surprise Prediction) identifies companies that have recently witnessed positive earnings estimate revision activity. The idea is that this more recent information can serve as a better predictor of the future, giving investors a leg up during earnings season. When combining a Zacks Rank #3 or better with a positive Earnings ESP, stocks produced a positive surprise 70% of the time according to our 10-year backtest.
With an Earnings ESP +6.29% and a Zacks Rank #3 (Hold) rating, another earnings beat may be in the cards for AZO investors when the company reports fiscal Q1 results on December 6th.
Make sure to keep an eye on AZO as the stock looks primed to continue its dominant trend.