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Is a Beat in the Offing for AutoZone's (AZO) Q3 Earnings?

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AutoZone, Inc. (AZO - Free Report) is set to release third-quarter fiscal 2021 results on May 25, before the opening bell. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings and revenues is $18.93 per share and $3.15 billion, respectively.

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

Over the trailing four quarters, AutoZone surpassed the Zacks Consensus Estimate on all four occasions — the average surprise being 12.1%. 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 third-quarter earnings per share has moved 31 cents north in the past seven days. This also compares favorably with the year-ago quarter’s earnings of $14.39 per share, indicating a 31.55% rise, year on year. Moreover, the Zacks Consensus Estimate for quarterly revenues suggests year-over-year growth of 13.5%.

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 +4.41%. This is because the Most Accurate Estimate of $19.76 per share comes in 83 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

Amid the economic recovery from the pandemic lows buoyed by the widespread vaccination drive and fiscal stimulus, customer demand for new vehicles shot up in the months of February, March and April. Also, the fear of using public transportation instilled by the pandemic has triggered a surge in demand for personal vehicles. This, in turn, has buoyed demand for automotive replacement parts and accessories. This is likely to have aided Autozone’s sales during the to-be-reported quarter.

Moreover, impressive sales growth in both retail DIY (‘Do-It-Yourself) and commercial DIFM (‘Do-It-For-Me) businesses is anticipated to have driven revenues for AutoZone in the to-be-reported quarter.

AutoZone has been focusing on development of new stores to boost sales. Store expansion initiatives, fast delivery and superior-quality products are anticipated to have positively impacted the company’s market share during the fiscal third quarter.

The company’s digitalization efforts to enhance customers’ shopping experience are likely to have boosted the company’s top line during the fiscal third quarter. AutoZone’s initiatives to enhance in-store systems and website traffic are likely to reflect on the quarterly performance. Ship-to-home next day, buy online and curbside pick-up options are expected to have supported AutoZone’s sales despite the prolonged Covid-19 woes. Further, the company’s cost-reduction efforts are likely to have aided margins.

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