AutoZone (AZO) Stock Plunges After Q1 2026 Earnings Miss — What Investors Need to Know Today

December 9, 2025

AutoZone, Inc. (NYSE: AZO) is back in the headlines — and not in the way existing shareholders were hoping.

After posting fiscal Q1 2026 results that showed solid sales growth but weaker profitability, AutoZone stock sold off sharply on Tuesday, becoming one of the worst performers in the S&P 500. The move comes despite continued same-store sales momentum, aggressive store expansion, and a long-term growth story that Wall Street still largely likes.

This is the classic “great business, imperfect quarter” situation — which markets tend to overreact to.

AutoZone stock today: sharp sell-off after earnings

In Tuesday’s session, AutoZone shares traded around $3,470 intraday, down roughly 7–8% from the prior close based on real-time pricing data. ^[1]

A separate report noted the stock down about 6.7% to roughly $3,516, making AutoZone the single worst performer in the S&P 500 on the day. ^[2]

Key context:

• The drop comes after a strong run: AZO was up about 18–23% over the past year heading into earnings, reflecting optimism about its durable business model and store expansion. ^[3]
• Trading volume spiked well above normal as investors digested the miss and guidance commentary. ^[4]

So, price action is ugly, but it’s happening from a high base.

Q1 fiscal 2026 earnings: strong sales, weaker margins

AutoZone reported results for its fiscal first quarter 2026, covering the 12 weeks ended November 22, 2025.

From the company’s official release and earnings summaries: ^[5]

• Net sales:
  • $4.63 billion, up 8.2% year over year (Q1 FY2025: ~$4.28 billion).
• Same-store sales (comparable sales):
  • Total company: +5.5%
  • Domestic (U.S.) same-store sales: +4.8%
  • International same-store sales: +11.2% (4.7% on a constant-currency basis).
• Profitability:
  • Gross margin:51.0%, down 203 basis points vs. last year, largely due to a 212 bps non-cash LIFO impact (inventory accounting), partially offset by other margin gains.
  • Operating expenses: 34.0% of sales vs. 33.3% last year, with deleverage mainly from investments in growth initiatives.
  • Operating profit:$784.2 million, down 6.8% year over year.
  • Net income:$530.8 million vs. $564.9 million a year ago.
  • Diluted EPS:$31.04 vs. $32.52 last year.

Wall Street was looking for a bit more:

• Analysts expected EPS around $32.7–$32.9, so the actual $31.04 was roughly a 3.5–3.8% earnings miss. ^[6]
• Revenue of $4.63B also slightly missed consensus estimates of about $4.64B. ^[7]

One notable detail: this marks roughly the sixth consecutive quarter where AutoZone has missed EPS expectations, even while growing sales — something the market is clearly tired of seeing. ^[8]

What drove the sell-off?

If you just glance at sales growth and comps, the quarter looks pretty solid. So why did the stock get punished?

Analyst notes and market commentary point to a few key issues: ^[9]

1. Margin compression
   • The big hit to gross margin from LIFO (last-in, first-out) accounting — over 200 basis points — spooked investors worried that inflation and inventory dynamics may keep nibbling at profitability. ^[10]
   • Operating expenses grew faster than sales, as AutoZone continues to spend on store openings, commercial programs, and international expansion.
2. Earnings miss + pattern of misses
   • Even small misses matter when a stock trades at a premium and has run up strongly.
   • AutoZone has now missed EPS estimates multiple quarters in a row, which feeds a narrative that management is struggling to translate top-line growth into bottom-line beats. ^[11]
3. Expectations were high
   • The stock’s strong performance over the past year and a rich valuation multiple meant investors were looking for a “clean” beat and upbeat commentary. Instead they got “good, but not great.”
4. Broader market tone
   • Tuesday’s broader market saw some pressure as bond yields rose and risk appetite wobbled, adding fuel to the sell-off in a name that had done well year-to-date. ^[12]

Put simply: sales are humming, but profit quality and guidance fine print are being scrutinized.

Growth engine still running: expansion, comps and commercial business

Stripping out the short-term drama, AutoZone’s operational engine still looks powerful.

From the Q1 release: ^[13]

• New stores:
  • Opened 39 new stores in the U.S., 12 in Mexico, and 2 in Brazil — 53 net new stores globally in the quarter.
  • Total store count now stands at 7,710 (6,666 in the U.S., 895 in Mexico, 149 in Brazil).
• Same-store sales strength:
  • Domestic comps +4.8% and total company +5.5% indicate demand remains healthy in both DIY and commercial channels.
• Commercial (Do-It-For-Me) business:
  • Domestic commercial sales rose 14.5% year over year in Q1, with weekly sales per program up about 10%, highlighting strong traction with professional repair shops. ^[14]
• Capital returns:
  • AutoZone repurchased 108,000 shares at an average price of about $3,999 per share, spending $431 million in Q1.
  • About $1.7 billion remains under the current repurchase authorization. ^[15]

Management reiterated plans to “aggressively open stores” over the remainder of the fiscal year, emphasizing the long-term goal of gaining market share and driving shareholder value. ^[16]

So the growth thesis — more stores, more commercial customers, more international presence — is intact. The current pain is mostly about margins and timing.

How Wall Street sees AutoZone after the drop

Despite the ugly trading day, traditional Wall Street analysts remain broadly bullish on AutoZone.

• A survey of 21–22 sell-side analysts shows a “Strong Buy” / “Buy” consensus rating with essentially no Sells. ^[17]
• Average 12-month price targets cluster between roughly $4,200 and $4,500 per share, implying upside of around 20–30% from the current mid-$3,400–$3,500 range:
  • One dataset puts the average target at about $4,503, with a range from approximately $3,678 (low) to $4,850 (high). ^[18]
  • Another has the target around $4,465, based on 2025 estimates. ^[19]
  • A recent Benzinga analysis cited an average Street target near $4,237. ^[20]

On the qualitative side:

• Bulls emphasize AutoZone’s scale, commercial growth, aging vehicle fleet tailwind, and heavy share buybacks as reasons the business can keep compounding earnings over time. ^[21]
• Bears focus on margin risk (inflation, LIFO charges, wage and logistics costs) and the stock’s premium valuation, which makes it vulnerable to any stumble — such as this quarter’s miss. ^[22]

In other words: Wall Street still likes the business a lot, but the tolerance for execution mistakes is limited.

Valuation check: is AZO cheap after the sell-off?

Whether AutoZone is “cheap” depends on which lens you use:

• A discounted cash flow (DCF) model from one independent research platform estimates AutoZone’s intrinsic value around $3,278 per share, suggesting the stock was about 17% overvalued before today’s drop. ^[23]
• Other sources highlight valuation ratios such as trailing P/E in the mid-20s and a one-year total return of roughly +23% heading into the print, reflecting a quality premium vs. the broader market. ^[24]

After a 7–8% pullback, AZO is less stretched, but still not a classic “deep value” name. The bull case is more about compounding — strong returns over time from:

• Continued mid-single-digit to high-single-digit comp growth
• Operating leverage as margins normalize post-LIFO shocks
• Aggressive share repurchases that boost EPS faster than net income

The bear case is that those assumptions are already mostly priced in, and repeated EPS misses chip away at the premium.

Technical and quantitative forecasts for AZO

If you’re the sort of person who speaks fluent RSI and MACD, quantitative and algorithmic services are offering some spicy takes on AutoZone right now.

A recent AI-driven technical analysis notes: ^[25]

• AZO fell about 7–8% in the latest session, with price weakness over recent weeks.
• Short-term and mid-term moving averages (like 5-day and 20-day) have turned bearish, with the 20-day below the 60-day, signaling a short- to mid-term downtrend.
• At the same time, multiple momentum indicators (RSI, Stochastic, CCI, Williams %R) have moved into oversold territory, which some traders interpret as a potential rebound setup.

One AI forecast tool projects: ^[26]

• A 1-week potential bounce in AZO,
• A moderately higher 1-month price, and
• A positive expected return into 2026 and even 2030, with long-term modelled prices well above current levels.

These are model-based projections, not guarantees — but they highlight how some quant systems still see AutoZone as a “Strong Buy candidate” after the drop.

Key risks investors should watch

Even if you like the business, AutoZone is not risk-free. Current news flow and recent reports shine a light on several key issues: ^[27]

1. Margin and cost pressures
   • LIFO accounting, inflation in parts and freight, wage growth, and investments in new stores and technology can all compress margins.
   • If LIFO charges stay elevated or operating expenses keep growing faster than sales, EPS growth could lag revenue growth for longer.
2. Valuation risk
   • A premium multiple plus high expectations is a volatile combo. When EPS misses pile up, corrections like today’s can happen quickly.
3. Competition and market dynamics
   • AutoZone competes with O’Reilly Automotive, Advance Auto Parts, and smaller regional players. Several of these also saw their shares trade lower alongside AZO after the earnings news. ^[28]
4. Structural changes in the car market
   • The current tailwind is an aging vehicle fleet — older cars need more repairs. Long term, increased EV penetration could reduce demand for some traditional parts, and AutoZone needs to keep evolving its assortment and capabilities. ^[29]
5. Macro-sensitive demand
   • While auto parts are somewhat “needs-based”, recessions, high fuel prices, or consumer stress can impact miles driven and discretionary repairs, pressuring comps.

For long-term investors, the question is whether these risks are temporary turbulence or signs of a more structural squeeze.

Bottom line: a high-quality compounder in a rough patch

Looking across today’s data points:

• Business fundamentals: Still strong. Solid mid-single-digit to high-single-digit comps, rapid commercial growth, and steady store expansion in the U.S., Mexico, and Brazil. ^[30]
• Quarterly execution: Mixed. Sales beat most retail peers, but margins compressed and EPS missed again — and the market has a short fuse for that right now. ^[31]
• Market reaction: A sizable one-day sell-off that wiped out part of a strong year-to-date gain, making AZO cheaper but not necessarily “cheap.” ^[32]
• Street and models: Traditional analysts remain broadly bullish with upside targets, while some valuation models call the stock modestly overvalued and technical models are flashing “oversold but structurally strong.” ^[33]

For investors watching AutoZone, the setup now is classic:

• Bulls see a best-in-class operator temporarily tripping on accounting/margin noise, creating a better entry point into a long-duration growth and buyback story.
• Bears see a premium stock with compressing margins and a pattern of EPS misses that deserves a lower multiple.

References

1. www.barrons.com, 2. www.barrons.com, 3. www.barrons.com, 4. intellectia.ai, 5. www.globenewswire.com, 6. finance.yahoo.com, 7. finance.yahoo.com, 8. www.barrons.com, 9. www.investing.com, 10. www.globenewswire.com, 11. finance.yahoo.com, 12. www.tradingview.com, 13. www.globenewswire.com, 14. www.globenewswire.com, 15. www.globenewswire.com, 16. www.globenewswire.com, 17. public.com, 18. stockanalysis.com, 19. public.com, 20. www.benzinga.com, 21. www.benzinga.com, 22. simplywall.st, 23. simplywall.st, 24. www.benzinga.com, 25. intellectia.ai, 26. intellectia.ai, 27. www.globenewswire.com, 28. www.barrons.com, 29. www.benzinga.com, 30. www.globenewswire.com, 31. finance.yahoo.com, 32. www.barrons.com, 33. public.com