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Why AutoZone Stock Tumbled after its 2Q18 Earnings Release

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AutoZone’s 2Q18 earnings

AutoZone (AZO), one of the top three US auto part retailers, released its fiscal 2Q18[1.the 12 weeks that ended February 10] results on February 27, 2018. In the quarter, the company’s adjusted EPS (earnings per share) stood at $8.47, 9.3% higher than its 2Q17 EPS of $7.75. However, the company missed Wall Street analysts’ EPS estimate of $8.92. Let’s see how investors reacted to AutoZone’s 2Q18 results.

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Negative reaction among investors

The day of AutoZone’s 2Q18 earnings release, its stock opened on a bearish note, down ~3.7%. This loss grew by the end of the session, and the stock closed 11.1% lower.

Despite seeing YoY (year-over-year) growth in 2Q18, the company may have disappointed investors with lower-than-expected earnings, softening sales growth, and mixed profit margins, leading to the negative Wall Street reaction.

As of March 2, AutoZone had fallen ~6.8% YTD (year-to-date), performing much worse than the S&P 500, which had risen 0.7% YTD. AutoZone’s peers have not performed much differently. While O’Reilly Automotive (ORLY) has risen slightly, by ~0.2% YTD, Advance Auto Parts (AAP), another US auto part retail giant, has fallen ~16.4%. US automakers (FXD) General Motors (GM) and Ford (F) have fallen 8.7% and 15.8%, respectively.

Series overview

In this series, we’ll look at key factors that drove AutoZone’s 2Q18 results. We’ll also see how the company did in terms of revenue and profitability. We’ll conclude the series by reviewing AutoZone’s valuation and some key technical indicators.

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