Why Is AutoZone (AZO) Down 4.3% Since Last Earnings Report?

Core Viewpoint - AutoZone's recent earnings report showed a mixed performance, with earnings per share missing expectations while net sales slightly increased year over year, leading to a downward trend in stock estimates and a Zacks Rank of 4 (Sell) [2][6][8] Financial Performance - AutoZone reported earnings of $48.71 per share for Q4 fiscal 2025, missing the Zacks Consensus Estimate of $50.52, but net sales increased by 0.6% year over year to $6.24 billion, surpassing the estimate of $6.22 billion [2] - Domestic commercial sales rose to $1.76 billion from $1.66 billion in the prior year, while same-store sales increased by 4.8%. However, gross profit decreased to $3.22 billion from $3.26 billion, and operating profit fell by 7.8% year over year to $1.2 billion [3] Store Expansion and Inventory - During the quarter, AutoZone opened 91 new stores in the U.S., 45 in Mexico, and 6 in Brazil, ending with a total of 7,657 stores globally [4] - Inventory increased by 14.1% year over year, with net inventory per store improving to negative $131,000 from negative $163,000 a year ago [4] Cash and Debt Position - As of August 30, 2025, AutoZone had cash and cash equivalents of $271.8 million, down from $298.2 million a year earlier, while total debt decreased to $8.8 billion from $9.02 billion [5] - The company repurchased 117,000 shares for $446.7 million during the fiscal fourth quarter, with $632.3 million remaining under its current share repurchase authorization [5] Market Sentiment and Estimates - Following the earnings release, there has been a downward trend in estimates, with the consensus estimate shifting down by 12.32% [6] - AutoZone currently holds an average Growth Score of C, a Momentum Score of F, and a Value Score of D, resulting in an aggregate VGM Score of D, indicating underperformance across investment strategies [7]