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All You Need to Know about AutoZone’s Fiscal 3Q16 Earnings

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May. 31 2016, Published 5:44 p.m. ET

AutoZone’s 3Q16 earnings

AutoZone (AZO), the largest US auto parts seller by the number of stores, released its fiscal 3Q16 earnings on May 24, 2016. The quarter ended May 7, 2016. The company’s adjusted EPS (earnings per share) stood at $10.88 for the quarter. That’s 14% higher than $9.57 in the corresponding quarter of the previous year. With this, AOZ’s earnings stood close to Wall Street analysts’ estimate of $10.91 per share. Now let’s take a quick look at the Market reaction to AutoZone’s fiscal 3Q16 earnings.

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The Market reacted positively

A day before AutoZone’s fiscal 3Q16 earnings release, its stock fell ~2.6%. However, on the day of the earnings release, it recovered sharply to erase those losses and closed with a ~2.5% rise for the session. The optimism was primarily driven by the significant increase in the company’s new stores and revenues with stable profit margins.

Roller-coaster year

In the first quarter of 2016, from January 1–March 31, 2016, the S&P 500 rose 1.1% with the help of a broader Market recovery in the month of March. This recovery has helped auto parts retailers, including AutoZone, recover. As of May 26, 2016, AZO stock is trading at a rise of 3.4% YTD (year-to-date).

So far in 2016, the performances of AutoZone’s direct peers have been similar. O’Reilly Automotive (ORLY) and Advance Auto Parts (AAP) are trading with rises of ~4.2% and 4.1% YTD, respectively.

These performances are better than US automakers (XLY), including General Motors (GM) and Ford (F).

Series overview

In this series, we’ll take a close look at AutoZone’s rising revenue. We’ll find out what factors drove the company’s 3Q16 earnings. We’ll also see how the company has been doing in terms of profitability. Finally, we’ll take a look at some important factors that may drive AutoZone’s valuation multiples in the coming quarters.

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