AutoZone, Inc. (NYSE:AZO) just released its yearly report and things are looking bullish. The company beat expectations with revenues of US$13b arriving 2.9% ahead of forecasts. Statutory earnings per share (EPS) were US$71.93, 9.6% ahead of estimates. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on AutoZone after the latest results.
Following the latest results, AutoZone's 23 analysts are now forecasting revenues of US$13.0b in 2021. This would be an okay 3.2% improvement in sales compared to the last 12 months. Statutory per-share earnings are expected to be US$74.75, roughly flat on the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of US$13.0b and earnings per share (EPS) of US$74.21 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
There were no changes to revenue or earnings estimates or the price target of US$1,376, suggesting that the company has met expectations in its recent result. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values AutoZone at US$1,570 per share, while the most bearish prices it at US$1,080. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We can infer from the latest estimates that forecasts expect a continuation of AutoZone'shistorical trends, as next year's 3.2% revenue growth is roughly in line with 3.7% annual revenue growth over the past five years. Compare this with the wider industry (in aggregate), which analyst estimates suggest will see revenues grow 9.3% next year. So although AutoZone is expected to maintain its revenue growth rate, it's forecast to grow slower than the wider industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that AutoZone's revenues are expected to perform worse than the wider industry. The consensus price target held steady at US$1,376, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for AutoZone going out to 2023, and you can see them free on our platform here.
Even so, be aware that AutoZone is showing 1 warning sign in our investment analysis , you should know about...
If you’re looking to trade AutoZone, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email email@example.com.