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One word AutoZone (AZO), maybe technically two?
For a while now I have been speculating that the auto sector (not Ford (F) or GM (GM)) may be the way to go and that thee is value in the sector. Results from those companies may be confirming that.
AutoZone (AZO), the largest U.S. auto parts retailer, reported higher quarterly earnings Tuesday. Net income rose to $158.6 million, or $2.49 per share, in its fiscal Q3 ended May 3, from $151.6 million, or $2.17 per share, a year earlier. Expectation were for $2.44 a share.
AutoZone did not repurchase any shares of its common stock during the third quarter. The Company has $108 million remaining under the authorization. Year-to-date, the Company has repurchased 2.9 million shares of its common stock for $350 million (4% of total oustanding).
During the quarter ended May 3, 2008, AutoZone opened 32 new stores and replaced three stores in the U.S. and opened two stores in Mexico. As of May 3, 2008, the Company had 4,032 stores in 48 states, the District of Columbia and Puerto Rico in the U.S. and 130 stores in Mexico. The compnay actually saw margins increase from 49.9% to 50.2%.
Sears' Chairman (SHLD) Eddie Lampert increased his stake in AutoZone to just over 36 percent from near 31 percent recently. Lampert also increase his stake in AutoNation Inc (AN), the largest U.S. auto dealership group. He holds just under 39 percent of AutoNation.
This comes a week after Advance Auto Parts (AAP), AutoZone's chief competitor, reported that net income grew 7.9% while revenue increased 4%.
While auto sales may fall, the chief recipient will be the parts stores as older car will need to be repaired rather than replaced. Add the "customization" trend out there now, AZO looks to have momentum for the foreseeable future.
I will check out the earnings call later...
PS. Where are the CNBC pieces about Lampert's "savvy investment"? Or, do they only run stuff when they can bash him? Erin?
Disclosure ("none" means no position):Long SHLD, None
One reply on “Another Reason for Auto Related Investing”
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