AutoZone Turned Positive in September after 6 Months of Weakness
On September 29, 2017, AutoZone stock (AZO) traded on a positive note and ended the week at $595.11, a rise of 3.7%. AutoZone has fallen ~24.6% YTD (year-to-date) but rose 12.6% in September. Its YTD performance wasn’t much different than its direct peers (XLY) O’Reilly Automotive (ORLY) and Advance Auto Parts (AAP), which fell 22.6% and 41.3% YTD, respectively. AZO reported its fiscal 4Q17 earnings results on September 19, 2017.
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Are 4Q17 results driving optimism?
In 4Q17, AZO’s adjusted earnings were $15.27 per share. That was 6.8% higher than its earnings in the same quarter of the previous year. Earlier, analysts were estimating its fiscal 4Q17 earnings to be $15.23.
AutoZone’s fourth-quarter revenues were $3.5 billion, a 3.3% year-over-year rise. It was much higher than analysts’ revenue estimates. During the quarter, the company opened 84 new stores in the United States and relocated one store, bringing its US store count to 5,465.
However, AZO’s EBIT (earnings before interest and tax) margin fell 55 basis points in 4Q17 to 20.1% compared to 4Q16.
AutoZone’s gross margins tend to be much higher than auto manufacturers such as General Motors (GM) and Ford (F).
Key technical levels
September 2017 was the first month of optimism for AutoZone stock after six months of consistent weakness. The stock violated a prior swing resistance of $570 last month, which should act as an immediate support level going forward. Any upward movement in the stock could see a trending resistance near $608 in the coming sessions.