- Same store sales increased 3.3% on a constant currency basis while gross margin fell 137 basis points to 52.5% in the quarter, the company said.
- While the company's fiscal Q2 comps fell short, its trends appear intact when excluding weather, Wells Fargo told investors.
- According to data from Koyfin, 21 of the 28 analysts covering AZO stock rate it ‘Buy’ or higher while six rate it ‘Hold’ and one a ‘Strong Sell’.
AutoZone on Tuesday reported second quarter (Q2) revenue below Wall Street expectations, sparking a selloff that Wells Fargo analyst Zachary Fadem deems a buying opportunity.
Shares of the company traded 5% lower at the time of writing.
AutoZone Earnings
The automotive parts retailer reported Q2 net sales of $4.27 billion, below a Wall Street estimate of about $4.31 billion, according to data from Fiscal AI.
However, diluted net income per share for the quarter came in at $27.63, above an analyst estimate of $27.44.
Same store sales increased 3.3% on a constant currency basis while gross margin fell 137 basis points to 52.5% in the quarter, the company said. The retailer also opened 64 net new stores in the quarter, taking the total store count up to 7,774.
The company said during its post-earnings call with analysts that its commercial sales increase fell below expectations due to the winter storms that impacted the U.S. during the quarter.
“Q2 is always our most difficult to forecast due to the less predictable winter weather patterns, and this quarter was no exception,” a company representative said.
Analyst Take Away
Wells Fargo recommends using the post-earnings selloff in shares of AutoZone as a buying opportunity. While the company's fiscal Q2 comps fell short, its trends appear intact when excluding weather, the analyst told investors in a research note. Wells says AutoZone's story is unchanged when backing out weather.
It kept an ‘Overweight’ rating on the shares with a $4,150 price target. The new price target represents a potential upside of about 7% from the stock’s closing price on Monday.
According to data from Koyfin, 21 of the 28 analysts covering AZO stock rate it ‘Buy’ or higher while six rate it ‘Hold’ and one a ‘Strong Sell’. The average price target on the stock is $4,205.75, representing an upside of over 10% from current trading levels.
How Did Stocktwits Users React?
On Stocktwits, retail sentiment around AZO stock rose from ‘neutral’ to ‘bullish’ territory over the past 24 hours, while message volume stayed at ‘high’ levels.
AZO stock has risen 6% over the past 12 months.
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