Stocks in the automotive industry have been red hot throughout 2013. Companies across the industry including Ford (F), General Motors (GM), and CarMax (KMX) have been crushing analyst expectations and soaring all year long. Another big company in the industry, AutoZone (AZO), is expected to post FQ1’14 earnings on Tuesday, December 10. Back in September I wrote an article leading up to Autozone’s FQ4’13 earnings report using data from Estimize which nailed the forecast on both EPS and revenue. The information below is derived from data submitted to the Estimize platform by a set of Buy Side and Independent analyst contributors. You can share your own estimates as well by visiting www.estimize.com.
In September the consensus from our contributing analysts was for AZO to report $10.41 EPS and $3.092B revenue. Wall Street was expecting $10.34 EPS and $3.101B revenue compared to the actual earnings reported of $10.42 EPS and $3.095B revenue. Our community accurately predicted that AutoZone would beat Wall Street on EPS and come up slightly short on revenue.
The Estimize consensus is more accurate than Wall Street 69.5% of the time because it represents unbiased market expectations. By tapping into a wider distribution of contributors including hedge fund analysts, asset management firm analysts, industry experts, and students Estimize is better able to capture the true market outlook.
Here is what our analysts are expecting from the report on Tuesday before the bell.
The current Wall Street consensus expectation is for AZO to report $6.26 EPS and $2.098B Revenue while the current Estimize consensus from our Buy Side and Independent contributing analysts is $6.29 EPS and $2.106B Revenue.
Our analysts are expecting AutoZone to beat the Wall Street consensus on EPS for the 6th consecutive quarter. The Estimize community has reversed its position on revenue compared to last quarter, on Tuesday the Estimize consensus expects revenue to exceed the Street’s forecast by $8M.
Over the past 5 quarters for which there is sufficient data Estimize was closer to forecasting the reported EPS 3 times and more accurate in forecasting revenue twice. 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’re seeing a smaller differential between the Estimize and Wall Street numbers for EPS but a larger difference in revenue compared to previous quarters.
The distribution of estimates published by analysts on Estimize range from $6.26 to $6.30 EPS and $2.100B to $2.111B Revenues. We’re seeing a narrower than normal distribution of estimates this quarter for AZO. 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. In this case it appears that market expectations are confident within a smaller band than usual. A narrower distribution signals the potential for less volatility post earnings, a greater vice versa.
Over the past 4 months the Wall Street and Estimize EPS and Revenue consensuses have similarly fallen throughout the quarter. Wall Street has decreased its EPS target from $6.34 to $6.26 and its revenue forecast from $2.119B to $2.099B. The Estimize consensus has dropped from $6.30 EPS to $6.29 and revenue has fallen slightly from $2.107B to $2.106B
The analyst with the highest estimate confidence rating this quarter is arrestoff who projects big numbers on the top and bottom line compared to Wall Street. Arrestoff projects $6.28 EPS and $2.111B revenue. Estimize confidence ratings are calculated through algorithms developed by our deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy.
Given the sector’s recent strength the Estimize community has set high expectations for both EPS and Revenue. Our analysts are predicting AZO to beat Wall Street on EPS for the 6th quarter in a row and to beat on revenue for the first time in the past 7 quarters. If demand for automobiles remains high and AutoZone can deliver on its earnings report we could see the industry’s engines continue to roar into the new year.
Get access to estimates for AutoZone published by your Buy Side and Independent analyst peers, and register to create your own estimates by heading over to Estimize now.