What Happened?
Shares of auto parts and accessories retailer AutoZone (NYSE:AZO) fell 6.3% in the morning session after it reported fourth-quarter earnings and sales that fell short of Wall Street expectations. The company's earnings per share came in at $31.04, missing analyst forecasts of $32.40. While net sales grew 8.2% year-over-year to $4.63 billion, the figure was slightly below estimates of $4.65 billion. Furthermore, same-store sales, a key performance indicator for retailers, rose 4.7% year-on-year. The company's profitability also weakened, with its gross margin declining by 2 percentage points and its operating margin falling to 16.9% from 19.7% in the same quarter last year, contributing to lower-than-expected profits.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy AutoZone? Access our full analysis report here.
What Is The Market Telling Us
AutoZone’s shares are not very volatile and have had no moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 7 days ago when the stock dropped 2.7% on the news that a Morgan Stanley report highlighted potential headwinds for the company, including tariffs and increased investments in business operations. The investment bank pointed to tariffs, which are taxes on imported goods, as a potential factor that could increase costs. The report also noted that AutoZone's own investments in selling, general, and administrative expenses—the day-to-day costs of running the business—could create challenges. Despite these concerns, the analysis acknowledged that the company could still see benefits from favorable long-term trends within the auto parts industry.
AutoZone is up 9% since the beginning of the year, but at $3,541 per share, it is still trading 18.7% below its 52-week high of $4,355 from September 2025. Investors who bought $1,000 worth of AutoZone’s shares 5 years ago would now be looking at an investment worth $3,115.
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