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AutoZone (AZO) to Release Q3 Earnings: What's in Store?

Zacks Equity Research

AutoZone, Inc. AZO is slated to report third-quarter fiscal 2019 (ended May 4, 2019) results on May 21, before the market opens. In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate. In fact, it recorded earnings beat in all of the trailing four quarters, the average earnings surprise being 8.1%.

In the past three months, AutoZone’s shares have outperformed the industry. The company’s shares gained 6.4% compared with the industry’s growth of 0.9%.

Let’s see how things are shaping up prior to this announcement.

AutoZone, Inc. Price and EPS Surprise


AutoZone, Inc. Price and EPS Surprise

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

Factors to Consider

AutoZone’s fast delivery of high-quality products is expected to drive third-quarter fiscal 2019 results. Besides having a growing physical presence through store openings, emerging presence on its online platform is likely to add customers for its retail (DIY) and commercial (DIFM) businesses. Such initiatives will further improve sales and market share for the leading retailer and distributor of automotive replacement parts and accessories in the soon-to-be-released quarter.

However, investments in technology and store payroll increases are hurting AutoZone’s operating expenses. Also, opening of distribution centers, mega hubs and stores, along with remodeling of old ones, are likely to further raise the company’s expenses in the third quarter of fiscal 2019. Continuous rise in expenses will hurt the company’s bottom line.

Additionally, dependence on seasonality and weather conditions for product sales positions AutoZone in a difficult spot. Unfavorable conditions can affect the company’s top line while a favorable one can drive the same.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for AutoZone this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as you will see below.

Earnings ESP: AutoZone’s Earnings ESP is -0.35% as the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $15.18 and $15.23, respectively.

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 of 2. This, when combined with negative Earnings ESP, makes prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into earnings announcement, especially when the company is witnessing negative estimate revisions.

Stock to Consider

Here is a stock worth considering as this comprises the right mix of elements to deliver an earnings beat this time around:

Deere & Company DE has an Earnings ESP of +0.03% and a Zacks Rank of 3. Its second-quarter fiscal 2019 results are set to be reported on May 17.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Peer Release

On Apr 30, Oshkosh Corporation OSK announced second-quarter fiscal 2019 earnings. In the reported quarter, the company posted earnings per share of $1.82 while net sales were $2 billion. The quarterly figures for the company surpassed the respective Zacks Consensus Estimate. It currently carries a Zacks Rank of 2.

On Apr 30, Cummins Inc. CMI announced first-quarter 2019 earnings. The company posted earnings per share of $4.20 and revenues of $6 billion. Its quarterly numbers beat the respective Zacks Consensus Estimate. It currently carries a Zacks Rank # 2.

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AutoZone, Inc. (AZO) : Free Stock Analysis Report
Oshkosh Corporation (OSK) : Free Stock Analysis Report
Cummins Inc. (CMI) : Free Stock Analysis Report
Deere & Company (DE) : Free Stock Analysis Report
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