Boston, MA 09/23/2014 (wallstreetpr) – Investment advisor, S& Capital IQ thinks that the chain of retailer and distributor of automotive replacement accessories and parts, AutoZone, Inc. (NYSE:AZN), has experienced cautious approach among its lower-end consumers in the recent quarter ended in August. The comments come on the heels of AutoZone reporting its fourth quarter, as well as, fiscal year 2014 financial results on Monday.
Revenues Below Estimate
The brokerage’s analyst, Efraim Levy, said that the company has reported earnings of $11.28 a share for the fourth quarter, which was three cents a share more than its estimation of $11.25 a share. However, revenues failed to meet the S&P Capital IQ average estimation. He has attributed this to lower-end customers remaining cautious. However, he feels that weakening gas prices would allow them to free some money for repairing vehicles.
The analyst also felt that AutoZone, Inc. (NYSE:AZN) revenues should gain from its expanding penetration of its commercial parts market. The intended acquisition of a distributor of import replacement parts, Interamerican Motor or IMC would provide growth options for AutoZone, Inc. (NYSE:AZN).
Rating Of Shares
Therefore, S&P Capital has reiterated its rating of Hold on the shares of AutoZone. The analyst also expects a strong cash flow to support AutoZone, Inc. (NYSE:AZN)’s ongoing share buyback program apart from double digit earnings per share uptick. He has a 12-month price objective of $540.00 for the stock.
CEO Speaks
AutoZone Chairman, President and Chief Executive Officer, Bill Rhodes, said that the company has committed itself in providing an outstanding customer services apart from trustworthy advice that the company has witnessed as a differentiator.
AutoZone, Inc. (NYSE:AZN)’s gross margin rose to 52.3% in the fourth quarter from 51.8% in the previous year quarter due to lower acquisition costs and shrink expense, partly offset by increased supply chain costs in connection with the current year inventories. However, its operating costs, as a percentage of sales, rose to 31.6% from 31.3% in the year earlier quarter on combination of deleverage, higher incentive and planned information system investments.
