The fiscal Q3 2014 earnings report for auto parts retailer stock AutoZone, Inc (NYSE: AZO), a peer of Advance Auto Parts, Inc (NYSE: AAP), O'Reilly Automotive Inc (NASDAQ: ORLY) and The Pep Boys - Manny, Moe & Jack (NYSE: PBY), is scheduled for before the market opens on Tuesday. Aside from the AutoZone earnings report, it should be said that Advance Auto Parts, Inc reported Q1 2014 earnings on May 15th (results were better than expected and they upped guidance); O'Reilly Automotive Inc reported Q1 2014 earnings on April 24th (results topped expectations); and The Pep Boys reported Q4 2013 earnings on April 15th and will report Q1 2014 earnings on June 10th (PBY reported a surprise loss as tire pricing negatively hit revenue). However and given the current uncertain economy that is keeping most consumers in their old cars, you would think that auto parts retailers in general would all be doing well.
What Should You Watch Out for With the AutoZone, Inc Earnings Report?First, here is a quick recap of AutoZone's recent earnings history from Yahoo! Finance:
| EPS Est | 7.21 | 10.34 | 6.28 | 5.55 |
| EPS Actual | 7.27 | 10.42 | 6.29 | 5.63 |
| Difference | 0.06 | 0.08 | 0.01 | 0.08 |
| Surprise % | 0.80% | 0.80% | 0.20% | 1.40% |
In early March, AutoZone reported higher than expected quarterly sales and earnings, but shares fell because operating expenses rose 9% to about $700 million. AutoZone reported a 7.3% net sales increase to $2.0 billion, a domestic same store sales increase of 4.3% and a net income increase of 9.4% to $192.8 million. The Chairman/CEO commented:
"We are pleased to report our thirtieth consecutive quarter of double digit earnings per share growth. The credit for this accomplishment goes to our passionate and dedicated AutoZoners across the globe who always put our customers first! During our second quarter, much of the U.S. experienced extreme weather conditions, and those weather patterns accelerated our growth in certain failure related hard part categories while our deferrable maintenance categories were challenged. We are continuing to test a variety of initiatives focused on improving inventory availability. One of the key initiatives is in the implementation phase, and while it is very early, we are pleased with our progress to date. The other tests are ongoing and it will take several more quarters before we determine our next steps."
This time around and according to the Yahoo! Finance analyst estimates page, the consensus expects revenue of $2.33B and EPS of $8.44 – slightly down from the EPS consensus of $8.45 expected thirty days ago and up from the EPS consensus of $8.41 expected ninety days ago.
On the news front, it was reported Thursday that Cleveland Research sees AutoZone's Q3 comp sales trends and earnings are tracking ahead of consensus driven by DIY momentum and commercial business. For that reason, they raised their Q3 EPS estimate to $8.50 verses a consensus of $8.46 and FY14 to $31.58 verses a consensus of $31.52.
On Wednesday, it was reported that AutoZone June call option implied volatility is at 21, July is at 20, September is at 18 and December is at 17 verses a 26-week average of 19. This suggests slightly large near term price movement into the earnings report.
What do the AutoZone, Inc Charts Say?The latest technical chart for AutoZone does show a slight downward trend since last February:
And while The Pep Boys has given a rather flat performance since the end of the recession, AutoZone, Advance Auto Parts, Inc and O'Reilly Automotive Inc have all been giving investors a great performance:
On the techncial chart side, Advance Auto Parts, Inc has produced a multiple top, O'Reilly Automotive is in a slight downtrend and The Pep Boys appears stuck in reverse:
Traders might want to take a closer look at the AutoZone options trading activities. However, I don't see any reason for long term investors to be nervous as AutoZone heads into earnings.
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