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Will Solid Comps Growth Fuel AutoZone's (AZO) Q2 Earnings?

AutoZone AZO is slated to release second-quarter fiscal 2022 results on Mar 1, before the closing bell. The Zacks Consensus Estimate for the quarter’s earnings and revenues is pegged at $17.80 per share and $3.16 billion, respectively.

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 23.2%. This is depicted in the graph below:

AutoZone, Inc. Price and EPS Surprise

AutoZone, Inc. Price and EPS Surprise
AutoZone, Inc. Price and EPS Surprise

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

Trend in Estimate Revision

The Zacks Consensus Estimate for fiscal second-quarter earnings per share has moved 1 cent north in the past 30 days. The bottom-line projection indicates a year-over-year improvement of 19.2%. The Zacks Consensus Estimate for quarterly revenues implies an 8.5% rise from the prior-year level.

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 reflect on 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 second quarter. While double down on expansion with the opening of new distribution centers, mega hubs and stores should 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

Our proven model does not conclusively predict 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. This is not the case here.

Earnings ESP: AutoZone has an Earnings ESP of -1.19%. This is because the Most Accurate Estimate is pegged at $17.59 per share, which is 21 cents lower 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.

Earnings Snapshots of Peers

O’Reilly Automotive ORLY reported fourth-quarter 2021 results on Feb 9. It posted adjusted earnings per share of $7.64, surpassing the Zacks Consensus Estimate of $6, led by growth in comparable-store sales. The bottom line also increased from $5.40 a share recorded in the prior-year quarter. Quarterly revenues of $3,291.5 million surpassed the consensus mark of $3,066.7 million and rose 16.4% from the prior-year figure.

ORLY projects total revenues within $14.2-$14.5 billion. Earnings per share are envisioned in the band of $32.35-$32.85. It forecasts comparable store sales growth within 5-7%. It envisions free cash flow in the band of $1.3-$1.6 billion and capital expenditure within $650-$750 million.

Advance Auto Parts AAP reported fourth-quarter 2021 results on Feb 14. It posted adjusted earnings of $2.07 per share, increasing 17.6% from the prior-year figure and topping the Zacks Consensus Estimate of $1.97 on higher-than-expected comps growth. Advance Auto generated net revenues of $2,397 million, topping the Zacks Consensus Estimate of $2,362 million and edging up 1.3% from the year-ago reported figure.

Advance Auto estimates 2022 net sales in the band of $11.2-$11.5 billion. Comparable store sales growth and adjusted operating income margin are envisioned in the range of 1-3% and 10-10.2%, respectively. Advance Auto expects capex in the $300-$350 million range and targets free cash flow of a minimum of $775 million. AAP also approved a 50% hike in its quarterly cash dividend.

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

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O'Reilly Automotive, Inc. (ORLY) : Free Stock Analysis Report

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AutoZone, Inc. (AZO) : Free Stock Analysis Report

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