AutoZone Inc. (AZO, Financial), a company that David Einhorn (Trades, Portfolio) invested in during the second quarter, said revenues for the quarter ending Aug. 25 increased 1.3% year over year on 2.2% same-store sales growth. Despite this, revenues of $3.56 billion lagged the consensus estimate of $3.59 billion.
The Memphis, Tennessee-based auto parts retailer reported net income of $400.3 million, down 7.7% from the prior-year quarter primarily due to the termination of pension plans that have been frozen since fiscal 2013. Excluding the impact of these terminations, net income was $494 million, or $18.54 per diluted share.
Company reports accelerating sales growth despite missing top-line consensus estimates
CEO Bill Rhodes said AutoZone delivered “solid financial results” during fiscal 2018, including positive same-store sales in both the company’s retail and commercial businesses. Commercial sales accelerated 8.8%, driven by a 3.2% year-over-year increase in the number of total commercial programs.
Although the company reported strong sales growth ovet the past 12 months, revenues of $11.221 billion underperformed the consensus estimate of $11.244 billion according to the company’s analyst estimates section of the summary page.
Company still meets Buffett-Munger investing strategy criteria
As of 11:30 a.m., AutoZone traded 3.12% lower from its previous close as it missed its top-line consensus estimate. Despite this, the company still meets Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B, Financial) co-managers Warren Buffett (Trades, Portfolio) and Charlie Munger (Trades, Portfolio)’s four-criterion investing approach. The Buffett-Munger model portfolio invested in 14 shares of AutoZone on Jan. 2, 2017.
GuruFocus ranks the company’s profitability 9 out of 10 on several positive investing signs, including a strong Piotroski F-score of 8 and operating margins that are outperforming 92% of global competitors, which include Advance Auto Parts Inc. (AAP, Financial), O’Reilly Automotive Inc. (ORLY, Financial) and Genuine Parts Co. (GPC, Financial).
AutoZone’s business predictability ranks four stars out of five as the company has consistent revenue and earnings growth over the past 10 years.
Disclosure: No positions.
