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S&P 500   3,693.23
DOW   29,590.41
QQQ   275.51
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Judge rejects Justice Dept.'s bid to stop sugar merger
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MarketBeat: Week in Review 9/19 – 9/23
China using civilian ships to enhance navy capability, reach
Goldman Sachs Alum Sounds Alarm on "Next US Crisis" (Ad)
German leader seeks energy deals, alliances on Gulf trip
World Bank head says he's not a climate denier, won't quit
S&P 500   3,693.23
DOW   29,590.41
QQQ   275.51
Become an Ethical Hacking and Cybercrime Expert
'A Gold Storm Is Coming' (Ad)
Judge rejects Justice Dept.'s bid to stop sugar merger
Will Wall Street's Enthusiasm About Datadog Lead To Big Gains?
Goldman Sachs Alum Sounds Alarm on "Next US Crisis" (Ad)
MarketBeat: Week in Review 9/19 – 9/23
China using civilian ships to enhance navy capability, reach
Goldman Sachs Alum Sounds Alarm on "Next US Crisis" (Ad)
German leader seeks energy deals, alliances on Gulf trip
World Bank head says he's not a climate denier, won't quit
S&P 500   3,693.23
DOW   29,590.41
QQQ   275.51
Become an Ethical Hacking and Cybercrime Expert
'A Gold Storm Is Coming' (Ad)
Judge rejects Justice Dept.'s bid to stop sugar merger
Will Wall Street's Enthusiasm About Datadog Lead To Big Gains?
Goldman Sachs Alum Sounds Alarm on "Next US Crisis" (Ad)
MarketBeat: Week in Review 9/19 – 9/23
China using civilian ships to enhance navy capability, reach
Goldman Sachs Alum Sounds Alarm on "Next US Crisis" (Ad)
German leader seeks energy deals, alliances on Gulf trip
World Bank head says he's not a climate denier, won't quit
S&P 500   3,693.23
DOW   29,590.41
QQQ   275.51
Become an Ethical Hacking and Cybercrime Expert
'A Gold Storm Is Coming' (Ad)
Judge rejects Justice Dept.'s bid to stop sugar merger
Will Wall Street's Enthusiasm About Datadog Lead To Big Gains?
Goldman Sachs Alum Sounds Alarm on "Next US Crisis" (Ad)
MarketBeat: Week in Review 9/19 – 9/23
China using civilian ships to enhance navy capability, reach
Goldman Sachs Alum Sounds Alarm on "Next US Crisis" (Ad)
German leader seeks energy deals, alliances on Gulf trip
World Bank head says he's not a climate denier, won't quit

Autozone Shifts Back Into Rally-Mode, New Highs Are In Sight

Autozone Shifts Back Into Rally-Mode, New Highs Are In Sight

The market for Autozone (NYSE: AZO) stock pulled back from a fresh all-time high ahead of the FQ4 earnings release because there was cause for concern. Not only was the stock trading at an above-average P/E for the S&P 500 (NYSEARCA: SPY) and well above its peer Advance Auto Parts (NYSE: AAP) but the fundamental set-up favored Advanced Auto Parts because of the channel mix. Advance Auto Parts has less exposure to DIY sales and the DIY channel was and is projected to be weaker in the near term, spurring the analyst to act, but their negativity appears to be misplaced. 

With these factors in play, Advance Auto Parts is still a more-attractive play for income investors but that doesn’t make Autozone an unattractive investment, far from it. Autozone’s Q4 results prove not only the company’s resiliency but the strength of the underlying market and its ability to generate healthy cash flow and fuel a robust capital return program. Autozone returned more than $4.4 billion to shareholders during F22 for a total of 2.2 million shares or about 10% of the share count at the start of the period. 

The company has a little more than $1.05 billion left under the current authorization which is worth another 2.4% of the market and a new authorization is likely to come at the end of the current period. The balance sheet shows some changes versus last year but not for the worse. While cash is down it is because of inventory build-ups that have the company in a position to continue operating at the level it has been. 


Autozone Advances On Strong Results And Outlook 

Autozone reported $5.35 billion in net revenue for the Q4 period which is not only up 9% versus last year but an acceleration from last year’s 8.1% gain and 370 basis points better than the Marketbeat.com consensus estimate. The gains were driven by a 6.2% gain in comp stores which was more than double the expectation and commercial business which grew by 22%. Revenue growth was also aided by new stores as well with the total count rising by 178 across the company’s operating territory. 

The good news did not end with the top line, either. Autozone posted a slim 73 basis point contraction in gross margin that is due more to its efforts to enhance operations than anything else. The contraction was offset by a decrease in operating expenses that left the operating profit up 5.7% and the GAAP EPS up 13% versus last year. The $40.51 in GAAP earnings is also $2.04 or 530 basis points better than expected which should lead to some upward revisions from the analysts. 

The company did not give any formal guidance but CEO Bill Rhodes made some favorable comments in regard to the coming year. From his perspective, “the investments we have made in both inventory availability and technology are enhancing our competitive positioning.  We are optimistic about our growth prospects heading into our new fiscal year.”

The Technical Outlook: Autozone Confirms Its Uptrend

The price action in Autozone fell from a peak but has already bottomed and is now confirming support at the long-term 150-day EMA. Assuming the market follows through on this trend-following signal, the stock should drift higher over the next few weeks and move up to set a new high fairly soon. In this scenario, investors should buy on pullbacks or price weakness but there is still a risk. The market conditions are not bullish in general and that may cap gains or even lead to a deeper correction in this stock. 

Autozone Shifts Back Into Rally-Mode 

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
SPDR S&P 500 ETF Trust (SPY)N/A$367.95-1.7%1.68%N/AHoldN/A
Advance Auto Parts (AAP)
2.9621 of 5 stars
$160.50-2.2%3.74%18.62Moderate Buy$235.56
AutoZone (AZO)
2.6249 of 5 stars
$2,096.84+0.7%N/A17.84Moderate Buy$2,236.65
Compare These Stocks  Add These Stocks to My Watchlist 

Should you invest $1,000 in AutoZone right now?

Before you consider AutoZone, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and AutoZone wasn't on the list.

While AutoZone currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

Thomas Hughes

About Thomas Hughes

Contributing Author: Technical and Fundamental Analysis

Thomas got his start with the markets while working as a Chef. In 2005 a chance invitation to attend the seminar “How To Buy And Sell Your Own Stocks” altered his worldview. Soon trading and stocks consumed his every waking moment to the point of excluding all else. Thomas now enjoys a much different lifestyle engaged in his true passion, uncovering great investments.
Contact Thomas Hughes via email at tmhughes.writeon@gmail.com.
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