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Can AutoZone (AZO) Keep Its Beat Streak Alive in Q1 Earnings?

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AutoZone (AZO - Free Report) is slated to release first-quarter fiscal 2024 results on Dec 5, before the opening bell. The Zacks Consensus Estimate for the quarter’s earnings and revenues is pegged at $30.82 per share and $4.17 billion, respectively.

The Zacks Consensus Estimate for AZO’s fiscal first-quarter earnings per share has moved 30 cents north in the past seven days. The bottom-line projection also indicates year-over-year growth of 12.3%. The Zacks Consensus Estimate for quarterly revenues implies a 4.5% rise from the prior-year level.

The automotive parts retailer posted better-than-anticipated results in the last reported quarter. Earnings of $46.46 per share improved 14.7% from the prior-year figure and topped the Zacks Consensus Estimate of $44.51. In the trailing four quarters, the company surpassed earnings estimates on all occasions, the average being 9.92%. This is depicted in the graph below:

AutoZone, Inc. Price, Consensus and EPS Surprise

AutoZone, Inc. Price, Consensus and EPS Surprise

AutoZone, Inc. price-consensus-eps-surprise-chart | 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.

Earnings ESP: AutoZone has an Earnings ESP of +1.46%. This is because the Most Accurate Estimate is pegged 45 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 currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Things 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 revenues during the to-be-reported quarter. AutoZone’s omni-channel efforts to improve customer shopping experiences are reaping profits. The company’s e-commerce efforts that are driving traffic to its website are likely to have positively impacted performance in the first quarter of fiscal 2024. Our projection for domestic store sales is pegged at $3.57 billion, implying an uptick of around 2.6% year over year. Our projection for sales from Mexico and Brazil stores indicates year-over-year growth of 18%.

Inventory assortment improvements, technological advancements, fast delivery and high-quality products, solid reputation of the Duralast brand across the professional customer base, maintenance of competitive pricing and greater engagement from store-operating teams are expected to have driven the company’s growth. AutoZone’s efforts to streamline operations for efficiency, reduce delivery times and enhance the effectiveness of its sales force are likely to have proved beneficial.

Store expansion initiatives, fast delivery and high-quality products are also anticipated to have positively impacted the company’s top line in the fiscal first quarter. We expect the total store count at the end of the to-be-reported quarter to be 7,174, implying a jump from the year-ago period’s 6,978. However, doubling down on expansion with the opening of new distribution centers, mega hubs and stores might have limited near-term financials and operating margins.

Peer Releases

O’Reilly Automotive, Inc. (ORLY - Free Report) reported third-quarter 2023 results on Oct 25. Its adjusted earnings per share of $10.72 beat the Zacks Consensus Estimate of $10.36. The bottom line increased from $9.17 in the prior-year quarter. The automotive parts retailer registered quarterly revenues of $4,203.4 million, crossing the Zacks Consensus Estimate of $4,070 million. The top line increased 10.6% year over year. During the quarter, comps grew 8.7%. The company opened 40 new stores in the United States and Mexico. The total store count was 6,111 as of Sep 30, 2023.

ORLY had cash and cash equivalents of $82.6 million at the end of the reported quarter, down from $108.6 million recorded as of 2022-end. Its long-term debt was $5,102.3 million, higher than $4,371.6 million as of Dec 31, 2022.

Advance Auto Parts, Inc. (AAP - Free Report) reported third-quarter 2023 results on Nov 15. It incurred an adjusted loss of 82 cents per share in third-quarter 2023 against adjusted earnings of $1.92 in the year-ago quarter. The reported figure was also in contrast to the Zacks Consensus Estimate of earnings of $1.42 per share. Advance Auto generated net revenues of $2,719 million, which topped the Zacks Consensus Estimate of $2,679 million and increased 2.9% year over year. Comparable store sales increased 1.2%. We projected an increase of 0.2%.

Advance Auto had cash and cash equivalents of $317.5 million as of Oct 7, 2023 compared with $269.3 million on Dec 31, 2023. Total long-term debt was $1,785.7 million as of Oct 7, 2023, up from $1,188.3 million on Dec 31, 2022. 

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