Why Shares of AutoZone Suddenly Plunged
Key Points
Earnings missed expectations due to tariffs.
The company continues to expand in a healthy auto parts aftermarket.
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AutoZone (NYSE: AZO) shares plunged on Tuesday, making it the worst-performing stock in the S&P 500 index at midday.
What's going on?
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Well, the automotive replacement parts and accessories chain reported its first-quarter financial results on Tuesday morning and Wall Street was not impressed.
While revenue in the quarter rose 8.2% from a year ago, to $4.6 billion, diluted earnings per share came in at $31.04, below last year's level and, more importantly, lower than the consensus analyst estimate of $32.71.
In addition, analysts expected same-store sales -- a key metric for any retailer -- to rise 5.6% over last year, but growth was lower at 5.5%.
The company blamed its falling earnings on tariffs.
Image source: Getty Images.
The auto parts chain continues to expand
That said, the auto parts retailer opened 53 net new stores in the quarter -- including 12 in Mexico and two in Brazil -- and said it plans to aggressively open more through the rest of the fiscal year. It currently has a total of 7,710 stores, all of them in the U.S., Mexico, and Brazil.
And the company is well positioned to benefit from a growing automotive aftermarket, which is expected to reach $576 billion this year in the U.S. and $2.3 billion globally. So investors might have overreacted on Tuesday.
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Matthew Benjamin has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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