AutoZone’s Stock Performance: Slower Growth Amid Market Challenges

The Company’s Position in the Automotive Parts Sector

Based in Memphis, Tennessee, AutoZone, Inc. (AZO) focuses on the retail and distribution of automotive replacement parts and accessories. With a market cap of $53.9 billion, the company offers an extensive range of products for various vehicles, including cars, SUVs, vans, and light trucks. This includes both new and remanufactured hard parts, maintenance supplies, accessories, and other items beyond automotive products.

A Year in Review: Stock Underperformance

Over the last year, shares of AutoZone have not kept pace with the broader market. The stock has increased by 22.1% in the past 52 weeks, which falls short of the 32.6% return seen in the S&P 500 Index ($SPX). In the year-to-date (YTD) performance for 2024, AZO has gained 15.7%, while the S&P 500 recorded 26.5% gains.

Focusing on specific sectors, AutoZone’s performance has also lagged behind the Consumer Discretionary Select Sector SPDR Fund’s (XLY) 32.6% returns over the past 52 weeks and 26.5% gains on a YTD basis.

Recent Earnings Report: A Mixed Bag

AutoZone announced its Q4 earnings on September 24, leading to a 2.1% increase in stock price the following trading session. The company reported adjusted earnings of $48.11 per share, falling short of Wall Street’s expectation of $53.31 per share. In contrast, its revenue of $6.2 billion exceeded forecasts of $6.18 billion.

Looking ahead, analysts project that AutoZone will achieve an earnings per share (EPS) of $158.09 for the fiscal year ending in August 2025, which represents an 8.2% increase from the previous year. Nonetheless, the company has a mixed history of earnings surprises, having surpassed consensus estimates in three of the past four quarters but missing on one occasion.

Analysts’ Consensus and Outlook

Among the 25 analysts who cover AZO stock, the consensus rating is a “Strong Buy,” supported by 19 “Strong Buy” ratings, one “Moderate Buy,” four “Holds,” and one “Strong Sell.”

This outlook marks an improvement from two months ago, when 18 analysts indicated a “Strong Buy.”

Future Projections and Analyst Insights

On October 16, Roth MKM analyst Scott Stember resumed coverage of AutoZone with a “Buy” rating and a price target of $3,634, the highest target on the Street. Stember emphasized AutoZone’s leadership position in the recession-proof auto parts retail sector. He believes the growth of the “do-it-for-me” service and professional offerings will support the company’s sales and earnings growth through fiscal 2026. He also sees significant potential in the steadier professional repair segment for the company.

AZO’s average price target of $3,294.83 suggests a potential upside of 4% from current price levels.

On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes. For more information, please view the Barchart Disclosure Policy here. More news from Barchart

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.