AutoZone, Inc. (ticker: AZO) shares plummeted 9 percent following the company’s fiscal third quarter earnings report miss on Tuesday morning. AutoZone’s numbers were so disappointing to investors that several other auto parts stocks are trading down sharply as well.
AutoZone reported earnings per share of $11.44, up 6.2 percent from a year ago but well short of consensus analyst expectations of $12. Revenue of $2.6 billion also missed consensus forecasts of $2.71 billion. The company reported same-store sales growth of 0.8 percent and a 7.3 percent increase in quarterly inventory.
AutoZone said it repurchased 396,000 shares of AZO stock in the quarter and still has more than $1 billion left under its current buyback authorization plan.
AutoZone CEO Bill Rhodes says delayed tax refunds are to blame for the bad quarter. “Our sales performace for the first five weeks of our quarter was significantly below our expectations, challenged by the well-publicized timing delays in IRS tax refunds,” Rhodes says.
However, Rhodes says the company is now positioned well for the summer months.
“Notwithstanding macro headwinds, including increasing wage pressures, we are confident in our long-term positive fundamentals for sales growth, and we remain committed to driving shareholder value.”
Rhodes’ optimism didn’t seem to reassure investors. In addition to AutoZone’s big sell-off, shares of Advance Auto Parts (AAP) and O’Reilly Automotive (ORLY) initially dropped more than 4 percent on Tuesday as well.
Auto parts retailers have been under pressure since January, when reports surfaced that e-commerce giant Amazon.com (AMZN) plans to target retail auto parts and the do-it-yourself auto repair markets. Amazon has agreed to supply contracts with parts makers Federal-Mogul Holdings, Dorman Products, Robert Bosch and Cardone Industries.
In the wake of the poor earnings results, Raymond James analyst Dan Wewer downgraded AutoZone from “strong buy” to “market perform.”
Shares of AutoZone, O’Reilly and Advance Auto Parts are…
Click here to continue reading
Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!
