Shares of AutoZone (AZO) fell nearly 3.5% in premarket trading but have leveled out since the market opened this morning. The auto parts retailer posted fiscal fourth-quarter earnings that exceeded analyst expectations in every way but one: domestic revenue.
The company reported an earnings beat of $46.46 per share compared to the consensus of $45.17. This was also an improvement year over year. Meanwhile, net sales for AutoZone came in at $5.69 billion – which also represented year-over-year growth. The Wall Street expectation was for just $5.61 billion.
Same-store sales were up 4.5% for the quarter – which exceeded the consensus estimate of 2.5%, but represented a step backward year over year compared to the 7.1% growth last year.
Investors and analysts alike have a habit of only taking the bad news from an earnings report and running with that. As for AutoZone, the shortcoming for the quarter happened to be total domestic commercial sales. The company’s $1.499 billion fell short of the $1.55 billion consensus.
CEO Bill Rhodes says that the pace picked up in the second half of the quarter despite starting on a slow note. Even though the company posted lower-than-expected commercial domestic sales growth, Rhodes believes the initiatives in place are sound and will continue to drive strong growth in fiscal 2024.
AZO has skyrocketed more than 235% over the past 5 years to $2,500/share. It has climbed more than 13% in the last year alone. While the stock is hovering around negative territory for the first 9 months of 2023, things still look foundationally sound.
In fact, we’ve taken a look at the VectorVest stock forecasting software and uncovered three things investors need to know right now about the foundations of this stock. Here’s the scoop…
AZO Has Excellent Upside Potential With Very Good Safety and Fair Timing
The VectorVest system has outperformed the S&P 500 index by 10x over the past two decades and counting. It’s done this while empowering investors to win more trades with less work.
The entire system is based on a simple proprietary stock rating system which gives you all the insights you need in 3 simple ratings: relative value (RV), relative safety (RS), and relative timing (RT).
Each rating sits on a scale of 0.00-2.00 with 1.00 being the average, which allows for quick and easy interpretation. But it gets even easier, as the system issues a clear buy, sell, or hold recommendation for any given stock at any given time. As for AZO, here’s what we found:
- Excellent Upside Potential: The RV rating compares a stock’s long-term price appreciation potential (forecasted three years out) and AAA corporate bond rates & risk. And right now, the RV rating of 1.41 is excellent for AZO. Even at its current price, it is undervalued, with a current value at $3,379.5.
- Very Good Safety: The RS rating offers insights into a stock’s risk profile. It’s derived from an analysis of the company’s financial consistency & predictability, debt-to-equity ratio, and business longevity. As for AZO, the stock has a very good RS rating of 1.29.
- Fair Timing: The RT rating analyzes a stock’s price trend - taking into account the direction, dynamics, and magnitude of price movement day over day, week over week, quarter over quarter, and year over year. Right now, the RT rating of 1.01 is just fair for AZO.
The overall VST rating of 1.23 is good for AZO - does that mean you should buy this stock or bolster your existing position? Should you sell and take your profits? Or, should you hold off and wait for a more meaningful price trend to form?
No need to play the guessing game or let emotion influence your decision-making. A clear answer is just a click away at VectorVest - get a free stock analysis today.
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VectorVest advocates buying safe, undervalued stocks, rising in price. Despite an overall positive earnings report, shares of AZO fell slightly in Tuesday’s trading session. Nevertheless, the stock has excellent upside potential, very good safety, and fair timing.
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