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AutoZone (AZO) Gears Up for Q2 Earnings: What Lies Ahead?

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AutoZone, Inc. (AZO - Free Report) is set to release second-quarter fiscal 2021 results on Mar 2, before the opening bell. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings and revenues is pinned at $12.68 and $2.72 billion, respectively.

The leading provider of automotive replacement parts posted better-than-expected results for the last reported quarter on higher-than-anticipated comparable sales growth.

Over the trailing four quarters, AutoZone surpassed the Zacks Consensus Estimate on all four occasions, the average surprise being 9.64%. This is depicted in the graph below:

AutoZone, Inc. Price and EPS Surprise

AutoZone, Inc. Price and EPS Surprise

AutoZone, Inc. price-eps-surprise | AutoZone, Inc. Quote

Trend in Estimate Revisions

The Zacks Consensus Estimate for fiscal second-quarter earnings per share has been revised upward by 10 cents in the past 30 days. This also compares favorably with the year-ago quarter’s earnings of $12.39 per share, indicating a 2.34% rise, year on year. Moreover, the Zacks Consensus Estimate for quarterly revenues suggests year-over-year growth of 8.2%.

Earnings Whispers

Our proven model predicts an earnings beat for AutoZone this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Earnings ESP: AutoZone has an Earnings ESP of +4.73%. This is because the Most Accurate Estimate of $13.28 per share comes in 60 cents higher than the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: AutoZone — peers of which include Advance Auto Parts (AAP - Free Report) , O’Reilly Automotive (ORLY - Free Report) and CarMax (KMX - Free Report) — carries a Zacks Rank of 3 currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors to Note

Sales growth in both retail DIY (‘Do-It-Yourself) and commercial DIFM (‘Do-It-For-Me) businesses is likely to have boosted the firm’s bottom line during the to-be-reported quarter. In fact, the Zacks Consensus Estimate for domestic commercial sales is pegged at $616 million, calling for an increase from the $557 million recorded in the year-ago quarter.

AutoZone has been focusing on expansion and development of stores to fuel sales. Store expansion initiatives, fast delivery and high-quality products are anticipated to have positively impacted the company’s market share, as well as the top line in the fiscal second quarter.
Encouragingly, the consensus mark for the total number of AutoZone stores for the to-be-reported quarter stands at 6,620, calling for a jump from the year-ago period’s 6,461.

Rising e-commerce initiatives to enhance customers’ shopping experience are anticipated to have buoyed the company’s sales in the fiscal second quarter. AutoZone’s initiatives to enhance in-store systems and website traffic are likely to reflect on the quarterly results. Ship-to-home next day, buy online and curbside pick-up options are expected to have propelled AutoZone’s sales despite the new Covid-19 strains prolonging the second wave of infections. Further, focus on cost discipline is anticipated to have aided margins.

Additionally, inventory-assortment improvements, technological upgradations, robust reputation of the Duralast brand and greater engagement from store-operating teams are likely to have yielded profits in the fiscal second quarter.

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