AutoZone Gears Up to Report Q3 Earnings: Here's What to Expect

AutoZone (AZO) is set to release Q3 fiscal 2025 earnings on May 27th, with consensus estimates pointing to EPS of $36.78 and revenue of $4.4 billion, representing a slight 0.25% EPS growth and 3.95% revenue growth year-over-year. Despite missing EPS estimates in three of the last four quarters, AutoZone anticipates continued growth driven by strength in both DIY and commercial segments, alongside store expansion, including its mega hub strategy; the company's Earnings ESP of +0.28% suggests a potential earnings beat for the quarter.

Analysis

AutoZone is poised to report its third-quarter fiscal 2025 results, with consensus estimates at $36.78 for EPS and $4.4 billion for revenue, indicating a slight 0.25% year-over-year EPS increase and a 3.95% rise in revenue. This anticipated growth builds on a strong historical performance, including 35 consecutive years of record sales and a 5.7% revenue increase to $18.5 billion in fiscal 2024. However, the current quarter's EPS consensus has been revised down by 10 cents over the past 30 days, and AutoZone has missed earnings estimates in three of the last four quarters, averaging a 3.23% negative surprise; its fiscal Q2 adjusted EPS also declined year-over-year. The company's growth strategy hinges on strengthening its DIY and commercial businesses, expanding its mega hub network (currently 111 locations, targeting over 200, with at least 19 more planned in H2 FY2025), and opening approximately 100 international stores in fiscal 2025. Same-store sales are projected to grow by 1.3% in Q3. Despite recent misses, a positive Earnings ESP of +0.28% coupled with a Zacks Rank #3 (Hold) suggests a potential for an earnings beat, indicating the Most Accurate Estimate surpasses the consensus. This report follows mixed results from industry peers, with Advance Auto Parts recently reporting a narrower-than-expected loss but declining year-over-year revenues, and O'Reilly Automotive missing consensus estimates despite some top-line growth.

Key Decisions for Investors

• Investors should closely monitor AutoZone's actual Q3 EPS and revenue figures against consensus, particularly focusing on whether the company can reverse its recent trend of earnings misses.
• Key performance indicators to scrutinize include the reported same-store sales growth compared to the 1.3% expectation, tangible progress on the mega hub expansion initiative, and the performance trajectory of the commercial business segment.
• While the positive Earnings ESP implies a potential for an earnings beat, this should be carefully weighed against the modest overall growth outlook and the company's recent history of earnings volatility when considering adjustments to investment positions.