What's Coming For AutoZone?

AutoZone, Inc. AZO will report its third quarter financial results before the market opens on Tuesday, and both analysts and the crowd expect earnings to fall within the company’s usual cycle.

The chart above illustrates AutoZone’s earnings cycle clearly. Third quarter earnings are projected above those for Q1 and Q2, but well below those for Q4. According to Estimize, experts are modeling earnings of $9.50 per share on revenue of $2.503 billion, while the crowd is anticipating marginally higher earnings of $9.51 per share on revenue of $2.509 billion.

These estimates compare to earnings of $8.46 per share and revenue of $2.342 billion reported in the same quarter last year.

A second chart illustrates the evolution of sentiment over time. The Street’s consensus fell since the beginning of the year, and now stands at its lowest.

What Analysts Think

In a recent report, Barclays analysts Alan M. Rifkin and Sam Reid took a look into U.S. hardline retailers, and the "further opportunity to lever up." The analysts say that these retailers "seem to be well positioned to use maturity to their advantage.”

Related Link: These 4 Retailers Are 'A Model' For Others, Barclays Says

They point out four retailers currently using their balance sheets to substantially increase returns. Among them is AutoZone.

A couple of months ago, analysts at Argus Research Company upgraded shares of AutoZone to Buy, setting a $736 price target, seeking to reflect prospects for further revenue growth, following a robust fiscal second quarter (2015).

Related Link: Argus Upgrades AutoZone On Strong Results On Future Growth Potential

For fiscal 2015, Argus expects diluted EPS of $35.80 (up from a previous estimate of $35.75, and above consensus of $35.82). For fiscal 2016, they anticipate diluted EPS of $40.43 (up from $40.14, and above consensus of $40.25).