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Omar Venerio
Omar Venerio
Articles (1710) 

Tuesday Morning Market Highlights

Markets green, shares of AutoZone jumps on earnings report

US Markets

U.S. stocks were mostly in the green on Tuesday morning after yesterday's loss. The Dow declined 0.10% to 27,119, the S&P 500 index advanced 0.19% to 3,287 and the Nasdaq Composite Index was up 0.22%, to 10,803.

Gainers

• CarMax, Inc. (NYSE:KMX) +4%

• Lockheed Martin Corporation (NYSE:LMT) 2.6%

• Royal Caribbean Group (NYSE:RCL) +2.5%

• Wynn Resorts, Limited (NASDAQ:WYNN) +1%

Losers

• Eastman Kodak (NYSE:KODK) -3.9%

• HCA Healthcare, Inc. (NYSE:HCA) -3.4%

• Edwards Lifesciences Corporation (NYSE:EW) -3.2%

• Host Hotels & Resorts, Inc. (NYSE:HST) -0.7%

Global Markets

The main European stock markets traded in the green. The UK's FTSE 100 gained 0.81%, France's CAC 40 jumped 0.50%, Germany's Dax was up 1.04% and Spain's Ibex 35 advanced 0.03%.

In Asia, Japan's Nikkei 225 gained 0.18%, India's BSE Sensex retreated 0.79%, Hong Kong's Hang Seng fell 0.98% and China's Shanghai Composite was down 1.29%.

AutoZone releases earnings report

Shares of AutoZone, Inc. (NYSE:AZO) gained 1.75% on Tuesday morning after the company announced its fourth-quarter fiscal 2020 results. The company posted earnings per share of $30.93 for the 16 weeks ended Aug. 29, beating analysts' estimates by $6.42. Revenue of $4.55 billion grew 14.0% year-over-year and also beat expectations by $400 million.

Chairman, President and CEO Bill Rhodes had the following to say:

"I'm very proud of the steps our team has taken in this regard (global pandemic) and I'm very appreciative of the phenomenal efforts of our AutoZoners who have continued to provide exceptional service to our customers throughout this entire extraordinary season! In recognition of their exceptional efforts and to provide them with much needed flexibility, we provided additional paid-time off for all eligible full and part-time hourly AutoZoners at the beginning of the pandemic. This quarter, we extended the same benefit to our Store Managers and distribution center Advisors, each of whom have been on the front line, supporting their teams and managing through an enormous amount of change. While we are very pleased with our performance, we know that the safety of our customers and AutoZoners along with our strong performance would not have been possible without the tremendous efforts of all AutoZoners across the organization."

In the quarter, the gross profit as a percentage of sales reached 53.1%, down 30 basis points from 53.4% for the same quarter of fiscal 2019. The decrease was due to lower merchandise margins caused by a shift in mix. Further, the operating expenses as a percentage of sales were 30.7%, down from 33.8% for last year's quarter.

The inventory rose 3.6% over last year's quarter, driven by increased product placement and new stores. Inventory per store was $683,000, lower than $674,000 of last year but higher than $685,000 from last quarter.

The company did not repurchase any shares during the quarter.

First Eagle Investment (Trades, Portfolio) added 86% to its holdings in the stock for a total of 31,600 shares. Joel Greenblatt (Trades, Portfolio) boosted his investment 40% to 10,542 shares. Tweedy Browne (Trades, Portfolio) reduced his holdings 4% to 98,698 shares.

Disclosure: The author holds no positions in any stocks mentioned.

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About the author:

Omar Venerio
Omar Venerio is a capital markets, derivatives, corporate finance and financial management professor and Area Head of Finance. He is passionate about the stock market and providing independent fundamental research and hedge fund and insider trading-focused investigation.

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