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AutoZone Stock Recovers after Falling ~10% on Q3 Results

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May. 25 2018, Updated 2:18 p.m. ET

AutoZone’s Q3 earnings

AutoZone (AZO), the top US auto part retailer by store count, released its fiscal third-quarter (ended May 5) results on May 22. In the quarter, the company’s adjusted EPS rose 17.3% YoY (year-over-year) to $13.42 from $11.44, beating analysts’ estimate of $12.97.

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Negative reaction and next-day recovery

The day of AutoZone’s earnings release, its stock settled on a bearish note, falling ~9.5%. Some of these losses were erased in the next session as AutoZone stock recovered by 3.3%.

Despite positive YoY earnings growth, the company’s softening sales and a sequential comp sales growth decline may have disappointed investors. As of May 23, AutoZone had fallen ~12.6% YTD (year-to-date), while the benchmark S&P 500 had risen ~2.2%.

Peers have outperformed AutoZone. While O’Reilly Automotive (ORLY) has risen ~12.8% YTD, Advance Auto Parts (AAP) has risen ~23.6%. In contrast, US automakers (FXD) General Motors (GM) and Ford (F) have fallen 7.7% and 7.4%, respectively.

Series overview

In this series, we’ll look at some key factors that drove AutoZone’s fiscal third-quarter results. We’ll also see how the company did in terms of revenue and profitability, and look at its valuation and key technicals.

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