MEMPHIS, Tenn., Aug. 20, 2025 (GLOBE NEWSWIRE) -- AutoZone, Inc. (NYSE: AZO), the leading retailer and distributor of automotive replacement parts and accessories in the Americas, will release results for its fourth quarter ended Saturday, August 30, 2025, before market open on Tuesday, September 23, 2025. Additionally, the Company will host a one-hour conference call on Tuesday, September 23, 2025, beginning at 10:00 a.m. (ET), to discuss the results of the quarter. This call is being webcast and can be ac ...

Company Performance - O'Reilly Automotive and AutoZone, Inc. have shown strong performance over the last decade by consolidating the auto parts industry, expanding their network, and returning capital to shareholders [1] Investment Strategy - Triba Research aims to identify high-quality businesses capable of delivering sustainable, double-digit returns over the long term, focusing on companies with strong competitive advantages, operating in growing markets, maintaining low debt levels, and led by skilled management teams [2]

Investment Rating - The report maintains a positive outlook on the auto parts retailing sector, highlighting it as a favorite for both offensive and defensive investment strategies [4]. Core Insights - The auto parts market is projected to grow to $170 billion, with an annual growth rate of 3-5% expected through 2025, supported by macroeconomic factors, vehicle parc dynamics, and weather conditions [4][21]. - AutoZone (AZO) is identified as a top pick at current prices, while O'Reilly Automotive (ORLY) is noted for its disciplined buying approach. Advance Auto Parts (AAP) is advised to be approached with caution due to potential share loss, and Genuine Parts Company (GPC) is expected to face challenges [4][12]. - The report emphasizes the importance of parts availability, service quality, and pricing in driving success within the sector [5]. Market Dynamics - The auto parts retail market is characterized by a significant number of SKUs (over 125,000), leading to a low inventory turnover rate of approximately 1.5 times per year. This creates a competitive advantage for larger players like the Big 4 [6]. - The report notes that the competitive landscape is shifting, with well-capitalized public companies gaining market share from smaller independents, aided by advancements in technology and inventory management [6][54]. - The report anticipates that artificial intelligence will further enhance market share for AZO and ORLY, while AAP and GPC work on resolving foundational issues [6]. Financial Projections - The report provides a detailed breakdown of the total addressable market (TAM) for auto parts, with retail sales projected to grow from $76.6 billion in 2022 to $77.6 billion in 2025, reflecting a modest growth trajectory [12]. - The commercial segment is expected to grow from $86.5 billion in 2022 to $97.3 billion by 2026, indicating a stronger performance compared to the retail segment [12]. - The report highlights that the Big 4 collectively hold a market share of approximately 30.4%, with AZO and ORLY showing significant gains in their respective shares [12]. Competitive Positioning - ORLY is recognized as the distribution gold standard, with superior parts availability driven by its extensive distribution center (DC) network and fulfillment strategies [54]. - AZO is closing the gap with ORLY through its Megahub strategy, which aims to enhance inventory density and improve service levels [55]. - AAP is attempting to replicate AZO's model but currently lags behind in terms of inventory per store and distribution efficiency [55]. Consumer Trends - The report discusses the impact of electric vehicles (EVs) on the auto parts market, suggesting that while EVs will comprise about 25% of new vehicle sales by 2030, their effect on maintenance demand will be limited in the medium term [8][68]. - Factors such as range anxiety, the need for a national charging network, and the cost of battery replacement are identified as significant hurdles to EV adoption [71]. Economic Indicators - The report outlines various economic indicators that influence the auto parts market, including real GDP growth, miles driven, and disposable income trends, all of which are expected to support market growth in the coming years [21].

Core Viewpoint - Jami Dimon, CEO of JPMorgan Chase, warns of a potential "cracking" in the bond market due to excessive deficit spending and high debt levels, with the 10-year yield at levels not seen since 2007 [1] Group 1: Companies Resilient to Bond Market Cracking - Philip Morris International is well-positioned to thrive regardless of bond market conditions, primarily due to its international market focus and recession-proof tobacco products [4][5] - The next-gen products, including Zyn and IQOS, now account for over 40% of Philip Morris's revenue and gross profit, indicating growth potential despite a mature market [6] Group 2: AutoZone's Performance in Weak Economies - AutoZone demonstrates resilience in recessionary environments, benefiting from consumers opting for repairs over new car purchases [7] - The company's hub-and-spoke store model enhances its market performance by ensuring all stores are well-stocked, supporting its ability to thrive if bond markets weaken [8] Group 3: Dollar General's Economic Resilience - Dollar General is positioned to perform well during economic downturns as consumers tend to "trade down" to more affordable shopping options [9][10] - The company has a strong track record of success during past recessions, with a revenue model focused on consumer staples and a vast network of over 20,000 stores [11]

Core Viewpoint - AutoZone shares have declined approximately 6.8% since the last earnings report, underperforming the S&P 500, raising questions about the potential for a continued negative trend or a breakout before the next earnings release [1]. Group 1: Earnings Report and Market Reaction - Estimates for AutoZone have trended downward over the past month, indicating a negative sentiment among analysts [2]. - The stock has received an average Growth Score of C, a Momentum Score of D, and a Value Score of C, placing it in the middle 20% for the value investment strategy [3]. Group 2: Outlook and Future Expectations - The downward trend in estimates suggests a broader negative outlook for AutoZone, with a Zacks Rank of 3 (Hold), indicating expectations for an in-line return in the coming months [4].

Financial Performance - Net sales increased to $4.5 billion, a 5.4% increase over the comparable prior year quarter, driven by a 5.4% increase in same store sales on a constant currency basis[76][80] - Operating profit decreased 3.8% to $866.2 million, and net income decreased 6.6% to $608.4 million for the quarter, impacted by unfavorable foreign currency exchange rates[76][86] - Domestic commercial sales increased by $123.2 million to $1.3 billion, or 10.7% over the comparable prior year[80] - Net income for the fiscal year ended August 26, 2023, was $2,528,426, an increase from $1,663,585 for the thirty-six weeks ended May 6, 2023[116] - EBITDAR for the fiscal year ended August 26, 2023, was $4,471,048, compared to $2,934,533 for the thirty-six weeks ended May 6, 2023, reflecting a significant growth[116] Profitability Metrics - Gross profit for the quarter was $2.4 billion, with a gross profit margin of 52.7%, down from 53.5% in the prior year due to higher inventory shrink and new distribution center startup costs[82] - Gross profit for the thirty-six weeks was $6.7 billion, with a gross profit margin of 53.2%, slightly down from 53.4% in the prior year[89] - Adjusted after-tax return on invested capital (ROIC) for the trailing four quarters ended May 10, 2025, was 43.5%, down from 51.4% in the prior year[104] - The effective tax rate over the trailing four quarters was 20.6%[117] - The effective income tax rate increased to 20.4% for the thirty-six weeks ended May 10, 2025, compared to 19.8% in the prior year[92] Operating Expenses and Cash Flow - Operating expenses increased to $1.5 billion, representing 33.3% of sales, up from 32.2% in the prior year, primarily due to increased self-insurance expenses[83] - Net cash flows from operating activities for the thirty-six weeks ended May 10, 2025, were $2.2 billion, an increase from $1.9 billion in the prior year[97] - Capital expenditures for the thirty-six weeks ended May 10, 2025, were $885.6 million, up from $725.9 million in the prior year, driven by growth initiatives including the opening of 163 new stores[98] - Net cash flows used in financing activities for the thirty-six weeks ended May 10, 2025, were $1.3 billion compared to $1.0 billion in the prior year, with stock repurchases totaling $1.1 billion[99] Debt and Financing - Net interest expense rose to $111.3 million, with average borrowings of $9.2 billion and a weighted average borrowing rate of 4.48%[84] - Adjusted debt to EBITDAR ratio was 2.5:1 as of May 10, 2025, consistent with the prior year[105] - The company issued $500 million in 5.125% Senior Notes due June 2030, while repaying $400 million in 3.250% Senior Notes due April 2025[121] - The fair value of the company's debt was estimated at $8.8 billion as of May 10, 2025, reflecting a decrease of $57.9 million from its carrying value[122] - A one percentage point increase in interest rates would negatively impact pre-tax earnings and cash flows by $8.1 million for fiscal 2025 due to variable rate debt[122] - The company had $805.5 million of variable rate debt outstanding as of May 10, 2025[122] - Fixed rate debt was $8.0 billion as of May 10, 2025, with a potential fair value reduction of $340.3 million from a one percentage point increase in interest rates[122] Strategic Initiatives - The company plans to increase investments in growth initiatives, including new stores and hub expansions, compared to fiscal 2024[100] - The accounts payable to inventory ratio was 115.6% at May 10, 2025, down from 119.7% at May 4, 2024[101] - The company anticipates relying on internally generated funds and available borrowing capacity for capital expenditures and stock repurchases[102] - The Revolving Credit Agreement was amended to extend the termination date to November 15, 2028[106] - As of May 10, 2025, the company was in compliance with all covenants under its borrowing arrangements[107] - Total lease cost per ASC 842 for the trailing four quarters ended May 10, 2025, was $625,740, up from $558,627 for the trailing four quarters ended May 4, 2024[117]

Investment Rating - The report maintains a positive outlook on the Hong Kong stock market, indicating a strong risk appetite and suggesting investment opportunities in various sectors, particularly in virtual assets and Web 3.0 [3][10]. Core Insights - The Hong Kong stock market is experiencing a significant increase in risk appetite, with improved asset quality and trading volume, highlighting the value of asset trading platforms [3][10]. - There is a notable uptrend in multiple sectors such as AI, new consumption, and innovative pharmaceuticals, with a particular focus on small and mid-cap stocks in media and consumer sectors [3][10]. - The report emphasizes the ongoing development of virtual assets and the Web 3.0 market, driven by stablecoin policies and recent IPOs, suggesting that more regulatory frameworks will emerge [3][10]. - The trend of Chinese companies returning to Hong Kong for IPOs is gaining momentum, with increased trading of companies like NetEase and Ctrip in the Hong Kong market [3][10]. - The valuation of overseas Chinese assets remains influenced by US-China trade relations and the broader economic environment, necessitating close monitoring of trade policies and domestic economic changes [3][10]. Summary by Sections Education - The K12 education sector maintains high growth, with leading institutions reporting over 20% revenue growth during the winter training period, and an increase in non-academic course retention rates [5][11]. Luxury Goods - The luxury goods market shows slight pressure due to macroeconomic factors, but brands that align with demand trends are performing well, with cautious price increases observed [5][20]. Coffee and Tea Drinks & OTA - Coffee and tea remain key categories for delivery platforms, with strong performance from major brands like Luckin Coffee, which continues to expand its store presence [5][25]. E-commerce - The e-commerce sector faces slight pressure, but major platforms like Alibaba and JD.com are expected to benefit from ongoing promotional activities [5][26]. Streaming Platforms - Music streaming platforms are viewed as high-quality internet assets, with sustained profitability driven by scale effects [5][34]. Virtual Assets & Internet Brokers - The stablecoin leader Circle's IPO saw a 168% increase on its first day, marking a significant event in the virtual asset space [5][38]. Real Estate Transactions - Recent data shows a slight decline in second-hand housing transactions in major cities, suggesting a need for caution in the real estate market [5][50]. Automotive Services - The automotive aftermarket is under pressure, with traditional fuel vehicle service visits declining, while new energy vehicle service visits are increasing [5][45].

Core Insights - The article reflects on the author's past experiences with AutoZone, Inc. (NYSE: AZO) and emphasizes a focus on dividend investing in quality blue-chip stocks, BDCs, and REITs [1]. Group 1 - The author expresses a long-term investment strategy aimed at supplementing retirement income through dividends over the next 5-7 years [1]. - There is a commitment to helping lower and middle-class workers build investment portfolios of high-quality, dividend-paying companies [1]. - The article aims to provide a new perspective for investors seeking financial independence [1].

Core Viewpoint - The quarterly reports from Costco and AutoZone have initiated the Q2 earnings season, with Costco showing strong performance against consensus estimates, while broader expectations for the S&P 500 indicate a slowdown in earnings growth compared to Q1 [2][3][6]. Costco Performance - Costco reported earnings, revenues, and same-store sales that exceeded consensus estimates, with same-store sales increasing by +8% for the quarter, excluding gasoline and foreign exchange impacts, following a +9.1% growth in the previous period [3]. - The high single-digit growth in Costco's non-food merchandise suggests a competitive advantage over other retailers like Walmart and Target, likely due to its affluent customer base and potential market share gains [4]. - Despite tariff challenges, Costco's management noted that most merchandise is sourced domestically, with only about 25% of U.S. sales reliant on imports [5]. Broader Market Expectations - For Q2, S&P 500 earnings are expected to rise by +5.4% year-over-year, with revenues increasing by +3.7%, marking a significant deceleration from the +12% earnings growth and +4.7% revenue growth seen in Q1 [6]. - Since April, Q2 earnings estimates have been cut for 15 of the 16 Zacks sectors, with the most significant reductions in Transportation, Autos, Energy, Basic Materials, and Construction sectors [7]. - The Tech and Finance sectors, which contribute over 50% of S&P 500 earnings, have also seen downward revisions, although the Tech sector's revisions have stabilized recently due to easing tariff uncertainties [8][10][11].

Company Overview - AutoZone, founded in 1979, has grown from a single store to 6,500 locations in the U.S. and expanding in Mexico and Brazil [4] - The company is recognized for its strong brand and customer service, catering to both automotive repair technicians and DIY customers [3] Financial Performance - For fiscal 2024, AutoZone reported net sales of $18.5 billion, a year-over-year increase of nearly 6%, and earnings per share (EPS) rose 13% to $149.55 [5] - In the third quarter of fiscal 2025, net sales increased by 5.4% to $4.5 billion, with domestic same-store sales up 5% [5] - EPS in the latest quarter decreased by 3.6% compared to the previous year, attributed to aggressive investments in growth rather than weak demand [6] Growth Strategy - AutoZone is focusing on expanding its market share in the commercial sector by enhancing delivery capabilities, increasing sales staff, and opening "mega-hub" stores [7] - The company is committed to long-term growth despite short-term margin pressures due to these investments [7] Market Position - The automotive aftermarket, valued at over $2.3 trillion globally, is characterized by inelastic demand, making AutoZone's core business resilient even during economic downturns [9][10] - The average age of vehicles on U.S. roads has reached a record 12.8 years, indicating a growing need for maintenance and parts, which benefits AutoZone [13] Share Buyback Program - AutoZone has repurchased over $38 billion of its own shares since 1998, significantly reducing its shares outstanding [14][15] - The company has $1.1 billion remaining in its current buyback authorization, indicating a strong commitment to returning value to shareholders [15] Valuation and Future Outlook - AutoZone's forward price-to-earnings ratio is around 25, which is lower than competitor O'Reilly Auto Parts at 31, suggesting reasonable valuation [17] - The U.S. automotive aftermarket is projected to reach $617 billion by 2027, providing substantial growth opportunities for AutoZone [17]