In-line operating performance
AZO reported a broadly in-line Q218 comp (+2.2% vs. AE/consensus +2.0%/+2.3%), with Dec/Jan benefiting from colder weather. Gross margins were ~10bps ahead and operating margins were in-line (adjusting for impairments and divestments). Adj. EPS (ex tax reform benefit) was consequently broadly in-line with our pre-tax reform estimate. We do not believe this is comparable to the consensus $8.79 however, which likely factored in some benefits from tax reform. AZO also announced plans to divest IMC and AutoAnything.com, as the company focuses on core operations. Overall, a broadly in-line quarter.AutoZone is a retailer and a distributor of automotive replacement parts and accessories. The company operates stores in the United States, including Puerto Rico and Saint Thomas, Mexico, and Brazil. Each store carries a product line for cars, sport utility vehicles, vans and light trucks, including new and remanufactured automotive hard parts, maintenance items, accessories and non-automotive products. In addition, the company has a commercial sales program that provides commercial credit and delivery of parts and other products to local, regional and national repair garages, dealers, service stations and public sector accounts. The company also sells the ALLDATA brand automotive diagnostic and repair software.
Formed in 2003 by an established team from Cazenove, one of the most respected investment banks in the UK, Atlantic Equities conducts and publishes fundamental, bottom up research on mid and large cap US companies.
Atlantic provide order execution through a wide range of DMA products and algorithmic trading suites.
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