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What Wall Street Expects of AutoZone’s Bottom Line in 2019

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Jan. 25 2019, Updated 9:01 a.m. ET

EPS numbers

Analysts expect AutoZone’s (AZO) adjusted EPS to grow 17.8% YoY (year-over-year) to $9.98 in the second quarter of fiscal 2019. For fiscal 2019, analysts project EPS growth of 17.7% YoY to $59.33. However, for fiscal 2020, analysts expect EPS to increase of 6.1% to $62.95 on a YoY basis. The growth in the company’s top line, share buybacks, and a benefit from tax reforms should cushion the bottom line.

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For fiscal 2018, which ended on August 25, AutoZone reported adjusted EPS of $50.43, which came in better than the analyst consensus estimate and reported 14.4% growth YoY. For the first quarter of fiscal 2019, AutoZone’s adjusted EPS came in at $13.04, beating the analyst consensus estimate with 30.4% growth YoY.

Margins 

For fiscal 2018, AutoZone’s gross margin expanded by 53 basis points to 53.2% due to merchandise margins and offloading two business divisions. However, a higher supply chain was one offsetting factor.

Selling, general, and administrative expenses rose in 2018 by 13.7% YoY to $4.16 billion. The increased expenses were driven by higher impairment charges and closing pension plans. The selling, general, and administrative expense rate increased by 350 basis points to 37.1%.

Subsequently, the company’s operating profit was down 12.9% to $1.81 billion while the operating margin contracted by 300 basis points to 16.1%.

For the first quarter of fiscal 2019, AutoZone’s gross margin expanded by 90 basis points to 53.7%. SG&A expenses grew 3.6% to $929.6 million. The company’s operating margin was 18.5%, an increase of 40 basis points, mainly due to higher sales and gross margin expansion.

Expectations for peers

For 2018, analysts forecast Advance Auto Parts’ (AAP) adjusted EPS at $7.10, which would reflect an improvement over adjusted EPS of $5.37 reported for 2017. For O’Reilly Automotive’s (ORLY) fiscal 2018, analysts project adjusted EPS growth of 33.7% YoY to $16.11.

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