Auto parts and accessories retailer AutoZone (NYSE:AZO) reported results in line with analysts' expectations in Q2 FY2024, with revenue up 4.6% year on year to $3.86 billion. It made a GAAP profit of $28.89 per share, improving from its profit of $24.64 per share in the same quarter last year.

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“We are pleased with our international business as we delivered another quarter of double-digit growth. We remain committed to prudently investing capital in our business, and we will be steadfast in our long-term, disciplined approach to increasing operating earnings and cash flows while utilizing our balance sheet effectively,” said Phil Daniele, President and Chief Executive Officer.

Aiming to be a one-stop shop for the DIY customer, AutoZone (NYSE:AZO) is an auto parts and accessories retailer that sells everything from car batteries to windshield wiper fluid to brake pads.

Auto Parts Retailer

Cars are complex machines that need maintenance and occasional repairs, and auto parts retailers cater to the professional mechanic as well as the do-it-yourself (DIY) fixer. Work on cars may entail replacing fluids, parts, or accessories, and these stores have the parts and accessories or these jobs. While e-commerce competition presents a risk, these stores have a leg up due to the combination of broad and deep selection as well as expertise provided by sales associates. Another change on the horizon could be the increasing penetration of electric vehicles.

Sales Growth

AutoZone is one of the larger companies in the consumer retail industry and benefits from economies of scale, enabling it to gain more leverage on fixed costs and offer consumers lower prices.

As you can see below, the company's annualized revenue growth rate of 9.5% over the last five years was steady as it opened new stores and grew sales at existing, established stores.

This quarter, AutoZone grew its revenue by 4.6% year on year, and its $3.86 billion in revenue was in line with Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 7.3% over the next 12 months, an acceleration from this quarter.

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Same-Store Sales

Same-store sales growth is a key performance indicator used to measure organic growth and demand for retailers.

AutoZone's demand within its existing stores has generally risen over the last two years but lagged behind the broader consumer retail sector. On average, the company's same-store sales have grown by 4.4% year on year. With positive same-store sales growth amid an increasing physical footprint of stores, AutoZone is reaching more customers and growing sales.

In the latest quarter, AutoZone's same-store sales rose 3% year on year. This growth was a deceleration from the 5.3% year-on-year increase it posted 12 months ago, showing the business is still performing well but lost a bit of steam.

Key Takeaways from AutoZone's Q2 Results

It was good to see AutoZone beat analysts' gross margin expectations this quarter. We were also glad its EPS outperformed Wall Street's estimates. Overall, this quarter's results seemed fairly positive and shareholders can feel optimistic. The stock is up 2.3% after reporting and currently trades at $2,840 per share.

AutoZone may have had a good quarter, but does that mean you should invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.