Analysts Expect Positive Trend in AutoZone’s Revenue to Continue



Trend in AutoZone’s revenue

In fiscal Q2 2018, AutoZone (AZO) reported total revenue of $2.4 billion, which reflected a 5.4% YoY (year-over-year) increase. During the second quarter, the company’s domestic same-store sales worsened sequentially and fell to 2.2% compared to 2.3% in Q1. Now, let’s look at analysts’ estimates for the company’s fiscal Q3 2018 revenue.

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Estimates for fiscal Q3 revenue

Analysts estimate AutoZone’s Q3 2018 revenue to be up by ~3.4% YoY to $2.7 billion. Previously in fiscal Q3 2017, the company reported revenue of $2.6 billion. Expectations of a sales recovery in the domestic market along with AutoZone’s focus on international business expansion could be key reasons for analysts’ positive revenue growth estimates. In the last few quarters, AZO’s management has highlighted the importance of expanding its business in international markets.

Hopes from DIY segment

AutoZone’s do-it-yourself (or DIY) segment is a major contributor to the company’s revenue. This segment refers to auto parts sales to customers without providing mechanics’ help to change or fit vehicle parts.

In the last few quarters, AZO hasn’t seen any major expansion in its domestic DIY segment market share, but still, the majority of its revenue comes from DIY operations. The company typically generates higher profit margins from its DIY segment as compared to its commercial segment.

Similarly, mainstream automakers (IYK) including Ford (F), General Motors (GM), and Fiat Chrysler (FCAU) make higher profits on truck sales as compared to small car sales. During the last three years, the demand for trucks has improved significantly, while the demand for small cars has gone down.

Continue to the next part to learn about analysts’ estimates for AZO’s fiscal Q3 2018 profit margins.


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