Shares of AutoZone
Net sales climbed nearly 10%, to $1.8 billion, during the chain's fiscal third quarter, fueled by store expansion and a robust 7.1% spike in comps.
The news gets even better under the hood: Widening margins led to a nearly 17% boost in net income. AutoZone has also been aggressively repurchasing shares over the past year, shaving the fully diluted shares outstanding by 11%. Healthier profits, divided by fewer shares, resulted in earnings-per-share improvement of 32%, to $4.12 a share.
Analysts were only banking on a profit of $3.66 a share, which may explain why AutoZone shares skidded to a close 6% higher than they had the previous day.
The company's results are quite surprising, given that its industry thrives when the automobile industry goes soft. If drivers are holding back on big-ticket purchases, they'll hold on to their older cars a little longer. Aging autos require a more maintenance; that's where the auto parts chains pull in.
Yet now, the auto market isn't dogging it at all. Ford
So why is the 4,309-store AutoZone chain still rocking? The secret to delivering what is now 15 consecutive quarters of double-digit EPS growth appears to be a combination of strong sales of replacement parts and a newly enlightened base of drivers. More car owners apparently realize that they can save serious money by skipping dealership service centers to perform oil changes and other routine procedures themselves.
Rival Advance Auto Parts
This has quietly become an impressive "all weather" sector. Just wait until analysts begin catching up to that new normal.
Are auto parts chains unsinkable? Share your thoughts in the comment box below.
Longtime Fool contributor Rick Munarriz is a Sirius and XM subscriber but he does not own shares in any of the companies mentioned in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.