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Here's What to Expect From AutoZone's (AZO) Q4 Earnings

AutoZone AZO is slated to release fourth-quarter fiscal 2022 results on Sep 19, before the closing bell. The Zacks Consensus Estimate for the quarter’s earnings and revenues is pegged at $38.31 per share and $5.14 billion, respectively.

The Zacks Consensus Estimate for fiscal fourth-quarter earnings per share has moved 7 cents south in the past 30 days. The bottom-line projection indicates a year-over-year increase of 7.25%. The Zacks Consensus Estimate for quarterly revenues implies a 4.54% rise from the prior-year level.

The automotive parts retailer posted better-than-anticipated results in the last reported quarter. Over the trailing four quarters, the company surpassed earnings estimates on all occasions, with the average being 20%. 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

What Does Our Model Say?

Our proven model does not 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 -2.73%. This is because the Most Accurate Estimate is pegged at $37.26 per share, which is $1.05 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.

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. The Zacks Consensus Estimates for fiscal fourth-quarter’s comps growth is 3.01%, indicating an increase from 2.6% recorded in the prior quarter.

On the flip side, the company’s store expansion initiatives are anticipated to have negatively impacted AZO’s bottom line in the fiscal fourth 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.

Peer Releases

AutoZone’s close peers include Advance Auto Parts, Inc. AAP and O’Reilly Automotive ORLY.

Advance Auto reported second-quarter 2022 (ended Jul 16, 2022) results on Aug 23. It posted adjusted earnings of $3.74 per share, up 10% from the year-ago quarter figure. The reported figure was in line with the Zacks Consensus Estimate. The company generated net revenues of $2,665.4 million, falling short of the Zacks Consensus Estimate of $2,748 million but edging up 0.6% from the year-ago reported figure.

Discouragingly, Advance Auto trimmed its 2022 guidance. It estimates full-year net sales in the band of $11-$11.2 billion, down from the previous guided range of $11.2-$11.5 billion. Comparable store sales are now envisioned to decline up to 1% as against the prior forecast of 1-3% growth. Adjusted operating income margin is envisioned in the range of 9.8-10%, down from the prior estimate of 10-10.2%. Adjusted EPS is now forecast between $12.75 and $13.25, down from the previously guided range of $13.30-$13.85. The auto parts retailer now intends to buy back stocks worth $500-$600 million in 2022. It aims to open 125-150 new stores this year.

O’Reilly reported second-quarter 2022 results on Jul 27. It posted adjusted earnings per share of $8.78, missing the Zacks Consensus Estimate of $8.98. The bottom line, however, increased 5.4% from $8.33 recorded in the prior-year quarter. O’Reilly registered quarterly revenues of $3,670.7 million, missing the consensus mark of $3,696 million. The top line, however, was nearly 6% higher than the prior-year figure of $3,465.6 million.

During the quarter, ORLY opened 62 new stores in the United States. It did not open any new stores in Mexico. The total store count was 5,900 as of Jun 30, 2022. The company had cash and cash equivalents of $253.9 million at the end of the second quarter, falling from $631.6 million in the year-ago quarter. Its long-term debt was $4,669.8 million, higher than the year-ago level of $3,825.2 million.

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