AutoZone (AZI) reported better-than-expected fiscal fourth-quarter results as demand for auto parts improves in the coronavirus market. AutoZone stock rose solidly before the open, looking to regain key support and move toward a buy point.
Estimates: Analysts expected AutoZone earnings per share to rise 9.3% to $24.69 as revenue grew 2.1% to $4.07 billion, according to Zacks Investment Research. Same-store sales were seen growing 9.3%, according to Consensus Metrix.
Results: AutoZone earnings jumped 48% to $30.93 per share as revenue grew $4.55 billion. Same-store sales jumped 21.8%. But comps grew 16.5% in the final four weeks of the quarter, after the expiration of expanded jobless benefits.
Shares jumped 5% to 1,250 in early Tuesday stock market trading. That would push AutoZone stock back above a 1230.64 handle buy point in a nine-month consolidation, though 1,268.03 appears to be a better entry point now.
On Monday, shares undercut their 50-day line amid a broad market sell-off, according to MarketSmith chart analysis. The relative strength line for AutoZone stock has been moving sideways, a sign it’s neither leading nor lagging the market at large.
Salvage auction specialist Copart (CPRT) was not yet trading. Copart stock is on the IBD Long-Term Leaders list of stocks with earnings stability as well as solid growth and price performance.
AutoZone Sees Demand Improve, Adds Jobs
AutoZone announced Aug. 12 that it plans to add 20,000 new jobs to meet retail and commercial demand for auto parts.
Amid economic worries, consumers are more inclined to buy used vehicles rather than new. As such, sales of used vehicles are holding up better than new cars. The average age of vehicles on the road has also hit a record 11.9 years, driving up demand for auto replacement parts.
The trend is benefiting AutoZone as well as O’Reilly stock, a recent IBD Stock of the Day.
In Q3, AutoZone same-store sales fell 1% but “turned meaningfully positive” in the final four weeks of the quarter as federal stimulus checks began to flow, management said. O’Reilly has reported similar improvement.
Auto parts retailers tumbled in 2017 amid reports that Amazon (AMZN) was planning to enter the business.
Find Aparna Narayanan on Twitter at @IBDAparna.
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