AutoZone Inc. (NYSE:AZO) is set to report FQ2 2014 earnings before the market opens on Tuesday, March 4th. AutoZone is an aftermarket retailer of auto parts which operates over 5,000 stores across the United States and Mexico. This quarter AZO stock has performed well rising 15% as Wall Street is projecting year over year EPS growth of 16% and 6% sales growth. Auto dealers experienced a challenging winter in large part due to particularly harsh weather conditions. While the snow and extreme cold may disincentivize drivers from going out shopping, they could also be a significant source of wear on vehicles bolstering AZO's sales. Here's what investors are expecting from AutoZone Tuesday.
The information below is derived from data submitted to the Estimize.com platform by a set of Buy Side and Independent analyst contributors.
The current Wall Street consensus expectation is for AZO to report $5.56 EPS and $1.969B revenue, while the current Estimize.com consensus from Buy Side and Independent contributing analysts is $5.58 EPS and $1.973B in revenue. This quarter the buy-side as represented by the Estimize.com community is expecting AutoZone to beat the Wall Street consnesus on both EPS revenue by a small margin.
Over the previous 5 quarters for which data is available the consensus from Estimize.com has been more accurate than Wall Street in predicting AutoZone's EPS and revenue 4 times and once respectively. By tapping into a wider range of contributors including hedge-fund analysts, asset managers, independent research shops, students, and non professional investors Estimize has created a data set that is up to 69.5% more accurate than Wall Street, but more importantly it does a better job of representing the market's actual expectations. It has been confirmed by an independent academic study from Rice University that stock prices tend to react with a more strongly associated degree to the expectation benchmark from Estimize than from the Wall Street consensus.
The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case we are seeing a very small differential between the two groups.
The distribution of estimates published by analysts on the Estimize.com platform range from $5.57 to $5.60 EPS and $1.970B to $1.980B in revenues. This quarter we're seeing a narrow distribution of estimates for AutoZone.
The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A narrower distribution of estimates signaling more agreement in the market, which could mean less volatility post earnings.
Over the past 4 months Wall Street expectations on both EPS and revenue have been increasing. The Street's EPS consensus rose from $5.48 to $5.56 while its revenue consensus shot up at the end of the quarter from a low of $1.961B to $1.969B. Timeliness is correlated with accuracy and rising analyst revisions going into an earnings report are often a bullish indicator.
The analyst with the highest estimate confidence rating this quarter is turbinecity, who projects $5.57 EPS and $1.971B in revenue. In the Winter 2014 season turbinecity is rated as the top analyst and is ranked 17th overall among over 3,950 contributing analysts. Estimate confidence ratings are calculated through algorithms developed by deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case turbinecity is expecting AutoZone to report above the Wall Street consensus but miss the expectations from the Estimize.com community.
This quarter contributing analysts on the Estimize.com platform are expecting AutoZone to beat Wall Street expectations by a small margin. There seems to be strong agreement between the Estimize community and Wall Street as represented by the small distribution of estimates on Estimize and the thin differential to the Wall Street forecast. Expectations are high for AutoZone this quarter but the market seems to be in agreement about what to expect.