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AutoZone Stock: Trend Following Buy?
12 Dec
Summary
- AutoZone stock shows a strong uptrend, with a recent dip seen as a buying opportunity.
- Q1 sales increased 8.2% year-over-year, with comparable store sales up significantly.
- Despite margin contraction, investments are expected to pay off, and share count is decreasing.
AutoZone's stock (NYSE: AZO) is presenting a classic trend-following buy signal after a minor pullback in early December. The company's shares remain firmly entrenched in a strong long-term uptrend, suggesting the recent dip is more of a strategic buying opportunity than a cause for concern.
While fiscal first-quarter results slightly fell short of analyst projections, AutoZone's underlying operational performance was notably resilient. Net sales climbed to $4.63 billion, marking an 8.2% increase from the previous year, significantly outpacing other major retailers. This growth was propelled by a solid 4.8% rise in comparable U.S. store sales and an even more impressive 11.2% surge internationally, complemented by the addition of 53 new locations.
Despite a contraction in gross margin and increased operating costs attributed to growth investments, the company's financial health remains robust. The $530 million in net income adequately covers ongoing share repurchase activities, which reduced the share count by 1.5% for $431 million in Q1. The balance sheet shows no immediate red flags, with assets increasing at a faster pace than liabilities, signaling continued operational strength.
