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BTIG’s Alan Rifkin expressed optimism regarding AutoZone, Inc. (NYSE:AZO)'s industry-leading return on invested capital of 34 percent, disciplined capital management and robust industry fundamentals, along with “a relatively wide moat” versus e-commerce players.
The analyst maintains a Buy rating on the company, with a price target of $900.
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Q2 Expectations
AutoZone is scheduled to report its fiscal second-quarter 2017 results on Feb. 28, and Rifkin expects the EPS for the quarter at $8.23, marginally ahead of consensus, driven by a 1.5–2.0 percent comp.
Although the analyst believes that the core trends improved in Q2, as compared to Q1, a tax refund delay is expected to impact the reported comps by 30–50 bps.
“We are not concerned by any shortfall in comps caused by the delay as AZO should recapture lost sales in 3Q,” Rifkin explained.
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The underlying trends are expected to have improved in Q2, given that December was cold and a major snowstorm affected the north-east on Feb. 9, just before the end of the quarter.
“We believe the winter season was severe enough to break the lingering negative effects of last year’s mild winter,” the analyst stated.
Related Link: Jim Cramer Shares His Thoughts On Nike And AutoZone
Tax Refund Delay
Rifkin pointed out that the IRS was delaying refunds for about 40 million returns, accounting for about 25 percent of all tax returns that claim certain tax credits.
In the past years, the refunds reached consumers in the first half of February. However, this year, the refunds are not expected to reach consumer until the week of Feb. 27.
Given that AutoZone’s fiscal year second-quarter ended on February 11, this delay is estimated to hit the comps for the quarter by 30-50 bps, although any negative impact to the revenues is likely to be overcome in Q3, given that 84 percent of the company’s sales are nondiscretionary maintenance and failure items.
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.