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Can AutoZone (AZO) Maintain its Earnings Beat Run in Q3?

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AutoZone (AZO - Free Report) is slated to release third-quarter fiscal 2022 results on May 24, before the closing bell. The Zacks Consensus Estimate for the quarter’s earnings and revenues is pegged at $25.70 per share and $3.70 billion, respectively.

The Zacks Consensus Estimate for fiscal third-quarter earnings per share has moved 8 cents south in the past 30 days. The bottom-line projection indicates a year-over-year drop of 2.95%. The Zacks Consensus Estimate for quarterly revenues implies a 1.4% rise from the prior-year level.

The leading provider of automotive replacement parts posted better-than-anticipated results in the last reported quarter on the back of robust comparable store sales. Over the trailing four quarters, the company surpassed earnings estimates on all occasions, with the average being 26%. 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

What Does Our Model Say?

Our proven model predicts an earnings beat for AutoZone this time around as well. 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. This is the case here.

Earnings ESP: AutoZone has an Earnings ESP of +2.51%. This is because the Most Accurate Estimate is pegged at $26.34 per share, which is 64 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 carries a Zacks Rank of 3 currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors at Play

AutoZone’s wide-ranging product portfolio, serving both retail DIY (‘Do-It-Yourself) and commercial DIFM (‘Do-It-For-Me) businesses, is likely to have boosted comparable sales growth during the to-be-reported quarter. The company’s digitalization efforts to enhance customers’ shopping experience are also likely to have boosted top-line growth. Ship-to-home next day, buy online and curbside pick-up options are expected to have supported AutoZone’s sales. AZO’s initiatives to enhance in-store systems and website traffic are likely to have impacted the quarterly performance.

On the flip side, the company’s store expansion initiatives are anticipated to have negatively impacted AZO’s bottom line in the fiscal third quarter. While doubling down on expansion with the opening of new distribution centers, mega hubs and stores may have boosted AutoZone’s prospects, it may have strained near-term financials and operating margins. Further, AutoZone’s technology investments to improve the electronic catalog might have limited cash inflows in the to-be-reported quarter.

Earnings Whispers for AZO

AZO’s closest peer Advance Auto Parts (AAP - Free Report) is slated to report its first-quarter 2022 results on May 23, after the closing bell. Our model predicts an earnings beat for the company as it has the right combination of a favorable Zacks Rank and positive Earnings ESP. AAP currently carries a Zacks Rank #3 and has an Earnings ESP of +4.89%.

The Zacks Consensus Estimate for AAP’s to-be-reported quarter’s earnings and sales is pegged at $3.50 a share and $3.37 billion, respectively. Over the trailing four quarters, Advance Auto surpassed estimates on all occasions, the average surprise being 11%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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