AutoZone Still Grasping for Growth

Updated from 4:49 p.m. EDT

AutoZone (AZO Quote - Cramer on AZO - Stock Picks) is stuck in neutral.

The auto parts company has seen sales to its core market -- retail "do-it-yourselfers" -- barely budge for the second quarter in a row. Once again, the company found itself relying on lower-margin commercial business to boost its overall sales growth.

Due to a short quarter, which skewed year-over-year comparisons, AutoZone actually saw fourth-quarter sales fall 0.8%. But even after adjusting for this disparity, the company failed to report the solid sales growth that has spoiled investors in the past. Same-store sales to core retail customers inched up only 1% from a year ago. So it was commercial sales, which surged 24%, that pushed overall sales up 5.5% for the quarter.

For its part, AutoZone pointed to the commercial growth -- and soaring profits -- as impressive signs of strength.

"This is the fourth straight quarter of over 20% AZ Commercial comparable-sales increases," said CEO Steve Odland. "We are pleased to report another record quarter and fiscal year."

By now, AutoZone has a reputation for blowing past Wall Street estimates. In the latest quarter, the company -- which issues no guidance itself -- topped consensus expectations by 34 cents with earnings per share of $2.27. Excluding special items, the same company earned 47% less on a per-share basis a year ago.

But aggressive share repurchases have helped comparisons. Net income rose at a strong -- but noticeably slower -- rate of 31% in the quarter.

The market was not impressed. Following news of the company's tepid sales growth, AutoZone shares slipped $1.38 to $88.35 in after-hours trading.

Earlier this summer, the supercharged stock -- trading near record highs ahead of Monday's report -- also fell on worries about same-store sales to core retail customers. Since then, at least one analyst has predicted that AutoZone's racing profit growth may be at risk as well.

« Previous Page

1 2 3

Next Page »