Is There Another Gear For Autozone?

AutoZone, Inc. AZO are soaring today, gaining more than 6% after the company blew out earnings estimates, and hit an all-time high. Despite the earnings beat, is there more room for Autozone to run? It looks that ways, at least at first glance. The company said strong third-quarter results were aided by strong sales in stores open at least a year, and new outlets that helped grow earnings per share 28.5% year-over-year. The company reported earnings of $5.29 per share on revenues of $1.98 billion. That handily beat Wall Street estimates, which were $4.98 per share on $1.92 billion in revenues. Last year, the company earned $4.12 per share in the third quarter, so the company was really able to generate significantly higher earnings this quarter, as it continued to take market share. AutoZone said domestic same-store sales rose 5.3 percent%, as it opened 43 stores in the quarter. "We are very pleased to announce another quarter of strong performance. This marks the tenth consecutive quarter of 20% plus growth in earnings per share and our nineteenth consecutive quarter of double digit growth. Our results are the direct reflection of the dedication and commitment of our 60,000+ AutoZoners, who strive everyday to meet or exceed the needs of our customers. Additionally, our consistent, disciplined approach to enhancing our offerings through our ongoing initiatives is resonating with our customers, resulting in continued growth in market share. This quarter we achieved two significant milestones. We exceeded $1 billion in sales in our Commercial business on a trailing four quarter basis and we set another new all-time record for return on invested capital at 30.2%. We remain committed to our disciplined approach of growing operating earnings while efficiently utilizing our capital," said Bill Rhodes, Chairman, President and Chief Executive Officer. The company also made some strong comments during the conference call, saying the company is achieving earnings per share growth of 20%, and is committed to an investment grade rating, and its capital allocation strategy. Gross margins also rose, going from 50.7% to 51.2%, thanks in large part to a lower shrink expense and higher merchandise margins. The company, which counts Eddy Lampert among its major shareholders, has continued to grow throughout the recession and into the recovery, as it takes market share, and continues to repurchased shares. Shares are trading at less than 14 times next year earnings, indicating that shares may have more room to run, if the company can continue to execute on its share repurchase program, as well as taking market share away from its competitors. It looks like Autozone has another gear left in its engine, and perhaps then some. That could be why shares are stepping up on the accelerator today, up over 6%.