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Do Analysts Expect AutoZone’s Sales to Improve in Fiscal 2019?

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AutoZone stock

As we discussed in the first part of this series, AutoZone’s (AZO) fiscal fourth-quarter earnings received a mixed reaction from investors. Its stock fell 2.0% on the day of its earnings release before showcasing a recovery in the next session.

The company has a stable business model with low investment requirements to drive growth, compared to the auto manufacturing business. Now, let’s see what Wall Street analysts expect from AutoZone’s upcoming earnings.

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Analysts’ estimates for fiscal 2019

According to the consensus of Wall Street analysts’ estimates, a positive YoY (year-over-year) trend in AutoZone’s earnings could continue in fiscal 2019. Analysts expect its fiscal 2019 adjusted EPS to reach $57.45, about 13.9% higher than its fiscal 2018 adjusted EPS of $50.43.

In addition, analysts’ estimates for the company’s fiscal 2019 profitability reflect a positive trend with a net profit of $1.48 billion, up 7.0% YoY. According to these estimates, AZO’s adjusted net profit margin in fiscal 2019 is expected to improve to 12.6%, compared to 12.3% in fiscal 2018.

According to Autodata Corp., the US auto sales SAAR (seasonally adjusted annual rate) stood strong at 16.72 million units in August, compared to 16.58 million in August 2017. This rise was mainly due to the robust truck demand.

These higher US truck sales had a positive impact on the recent profitability of mainstream auto companies (XLY) General Motors (GM), Ford (F), and Fiat Chrysler (FCAU). As a result, these automakers are able to protect their profitability despite softening US auto sales. However, concerns about steep auto tariffs are haunting these auto investors in 2018 so far.

Expectations from sales in fiscal 2019

Analysts expect AutoZone’s sales growth rate to improve slightly in fiscal 2019. The estimates suggest the company’s 2019 revenues should be $11.7 billion, up ~4.2% YoY. This expected sales growth rate was better than 3.0% reported in fiscal 2018.

Continue to the next part to find out how AutoZone’s valuation multiples look after its fiscal fourth-quarter results.

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