Why Is AutoZone (AZO) Down 1.2% Since Last Earnings Report?

Core Viewpoint - AutoZone's recent earnings report showed a mixed performance, with earnings per share missing expectations while revenues increased year-over-year. The company faces a downward trend in estimates, indicating potential challenges ahead [2][6][9]. Financial Performance - AutoZone reported earnings of $32.52 per share for Q1 of fiscal 2025, missing the Zacks Consensus Estimate of $33.54. This is a slight decrease from $32.55 per share in the same quarter of fiscal 2024 [2]. - Net sales grew 2.1% year-over-year to $4.28 billion, but also fell short of the Zacks Consensus Estimate of $4.29 billion [2]. - Domestic commercial sales reached $1.13 billion, up from $1.09 billion in the prior year, while domestic same-store sales increased by 0.3% [3]. - Gross profit rose to $2.27 billion from $2.21 billion in the previous year, but operating profit decreased by 0.8% year-over-year to $841 million [3]. Store Expansion and Inventory - During the quarter, AutoZone opened 23 new stores in the U.S., six in Mexico, and five in Brazil, bringing the total store count to 7,387 [4]. - Inventory increased by 8.7% year-over-year, with inventory per store rising to $849,000 from $806,000 a year ago [4]. Financial Position and Share Repurchases - As of November 23, 2024, AutoZone had cash and cash equivalents of $304 million, up from $298.2 million at the end of August 2024. Total debt was $9.01 billion, slightly down from $9.02 billion [5]. - The company repurchased 160,000 shares for $505.2 million at an average price of $3,156 per share, with $1.7 billion remaining under its current share repurchase authorization [5]. Market Sentiment and Outlook - There has been a downward trend in estimates for AutoZone, with a Zacks Rank of 3 (Hold), suggesting an expectation of in-line returns in the coming months [6][9]. - AutoZone has a strong Growth Score of A but lags in Momentum Score with an F, resulting in an aggregate VGM Score of C [7].