AutoZone, Inc. AZO is expected to report first-quarter fiscal 2016 (ended Nov 21, 2015) results on Dec 8. In the last quarter, the company delivered a positive earnings surprise of 0.63%. Let’s see how things are shaping up for this announcement.
Factors Influencing this Quarter
AutoZone’s earnings per share have grown in double digits for 36 consecutive quarters. Earnings are expected to rise further, driven by flourishing revenues and higher gross margin from both the retail and commercial businesses, together with increasing store count and regular share buybacks. AutoZone is also focused on growing same-store sales.
However, consolidation among vendors and heavy reliance on private-label brands, which may affect margins, are some concerns for the company.
Earnings Whispers
Our proven model does not conclusively show that AutoZone is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is currently pegged at 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at $8.21.
Zacks Rank: AutoZone carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP. However, the company’s ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies you may want to consider as our model shows that these have the right combination of elements:
CarMax Inc. KMX has an Earnings ESP of +1.45% and a Zacks Rank #2 (Buy). The company will report third-quarter fiscal 2016 (ended Nov 30, 2015) financial numbers on Dec 18.
Delphi Automotive PLC DLPH has an Earnings ESP of +0.73% and a Zacks Rank #3. The company will report fourth-quarter 2015 results on Feb 3, 2016.
BorgWarner Inc. BWA has an Earnings ESP of +1.39% and a Zacks Rank #3. The company will report fourth-quarter 2015 results on Feb 11, 2016.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment