What Happened?

Shares of auto parts and accessories retailer AutoZone (NYSE: AZO) fell 1.6% in the afternoon session after the stock's negative momentum continued as the company reported first-quarter earnings that missed analyst expectations, alongside weaker-than-expected sales growth. 

The company posted earnings of $31.04 per share, falling short of the consensus estimate. While revenue met expectations, a key sales metric, comparable store sales, also grew less than anticipated. The earnings miss was attributed to a couple of factors. Firstly, a significant non-cash accounting charge related to inventory, known as a LIFO charge, negatively affected the company's gross profit margins. Secondly, operating expenses rose as the company made investments in new stores and supply chain improvements. Following the results, some analysts lowered their price targets on the stock.

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 only had 1 move 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 1 day ago when the stock dropped 6.3% on the news that 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.

AutoZone is up 5.4% since the beginning of the year, but at $3,426 per share, it is still trading 21.3% 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 $3,011.

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