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What to Expect for AutoZone’s Future Earnings

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AutoZone stock

As we discussed in the first part of this series, AutoZone (AZO) was unable to boost investors’ confidence despite reporting earnings and sales growth in 2Q18. In general, the company has a stable business model, with lower investment requirements to drive growth than the auto manufacturing business. In this part, we’ll see what Wall Street analysts expect for AutoZone’s upcoming earnings.

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Analysts’ estimates for 3Q18

Wall Street analysts expect AutoZone’s earnings growth trend to continue in 3Q18. Analysts expect it to see adjusted earnings per share of $13.05 in 3Q18, ~14% higher than the $11.44 it reported in 3Q17.

Also, analysts’ estimates for the company’s 3Q18 profitability reflect a negative trend. AutoZone’s adjusted net profit margin is expected to be 13.2% in 3Q18, compared with 12.7% in 3Q17 and 9.8% in 2Q18. Overall, these earnings estimates indicate near-term recovery.

Expectations from sales

Analysts expect AutoZone’s sales to continue to grow in fiscal 3Q18. The company’s 3Q18 revenue is expected to be $2.7 billion, up ~3.8% YoY, while its 4Q18 revenue is expected to be $3.6 billion, marking a ~2.4% YoY rise.

In the first two months of 2018, US auto sales have fallen 2.4% YoY, mainly due to weakness in small car demand. These lower US auto sales have impacted revenue for mainstream auto companies (VCR) General Motors (GM), Ford (F), and Fiat Chrysler (FCAU) in recent quarters. Continue to the next part for a look at AutoZone’s valuation after its 2Q18 earnings release.

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