AutoZone Beats Street, Shares Soar

Shares of AutoZone (AZO) soared 19.4% to $128.80 Tuesday after the company released better-than-expected fiscal Q1 earnings. Net income increased 7% to $132.5 million, or $2.02/share, compared to analysts' average estimate of $1.91/share. Sales grew 4.5% to $1.46B, beating expectations of $1.44B. AutoZone cited ongoing category management efforts and a shift in its sales mix to higher margin categories for its gross profit margin improving to 49.9% from 49.2% last year. "As our operating model continues to be strong, we will maintain our disciplined approach to growing operating earnings and utilizing our capital effectively," commented CEO Bill Rhodes (earnings call transcript).

AutoZone said domestic same-store-sales rose 1.3% in Q1. The company repurchased 2.9M shares of common stock during Q1 for $350M (or avg. $121/share) and has $108M remaining under its current buyback program. Wachovia analyst Peter Benedict reiterated his Outperform rating for AutoZone, saying the "fiscal first quarter results provided evidence of improved underlying demand, renewed commercial momentum and continued shareholder friendly capital allocation trends." AutoZone's competitors include Advance Auto Parts (AAP), CSK Auto (CAO), Genuine Parts (GPC), O'Reilly Automotive (ORLY) and Pep Boys (PBY).

Sources: Press release, MarketWatch, AP
Additional Reading: AutoZone Earnings Preview: Car Wreck on the Way?
Earnings call transcript: AutoZone F1Q08

Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.