AutoZone, Inc.

New York Stock Exchange
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Somewhat Bearish -25

Why AutoZone Stock Sank 21% In May

AI-generated analysis

📉 AutoZone shares fell 21% in May despite the broader market rising, according to S&P Global Market Intelligence data.

💸 The company reported disappointing quarterly earnings that missed Wall Street expectations for revenue growth.

📊 Revenue increased 8.4% year-over-year to $4.84 billion, but same-store sales growth slowed to 4.1% domestically and 1.6% internationally.

🌎 International expansion in Mexico and Brazil is causing investor concern due to weaker performance compared to the U.S. market.

💰 Net income grew 5.4% to $641 million, though profit growth lagged behind revenue growth.

🔄 Management spent $586 million on share buybacks last quarter, reducing shares outstanding by approximately 90% from their peak.

📉 The stock's price-to-earnings ratio dropped to 21 from a peak of 30 in 2025, making it appear more reasonably priced.

⚠️ Rising inflationary costs and unimpressive growth have pressured the retailer in recent quarters.

🛒 Same-store sales are critical for retailers as they measure revenue growth from existing units without new store openings.

📈 Investors may view the current dip as a buying opportunity if they believe in AutoZone's steady U.S. and Latin American expansion.

🚫 The Motley Fool Stock Advisor team did not include AutoZone in their latest list of 10 best stocks to buy now.

📊 Stock Advisor claims an average return of 983% compared to the S&P 500's 212% over its history.

🔍 The article suggests that while AutoZone has slowed growth, its valuation and buyback program could make it attractive post-decline.

⚖️ Analysts note that if international same-store sales continue to lag, it may signal brand weakness outside the United States.

📉 Shares outstanding are now down around 90% from their peak at the turn of the century due to aggressive buybacks.

Bullish Signals
  • AutoZone delivered steady profit growth with net income reaching $641 million, up 5.4% from the prior year.
  • The company continues its aggressive share repurchase program, spending $586 million on buybacks last quarter alone.
  • Shares outstanding have decreased significantly, now down around 90% from their peak at the turn of the century.
  • With the stock price decline, future share repurchases will be even more impactful in reducing the share count and boosting per-share value.
  • AutoZone trades at a price-to-earnings ratio (P/E) of 21, down from a peak of 30 in 2025, presenting a much more palatable valuation for investors.
  • The stock now trades at a much more reasonable price than before, potentially making it attractive to buy after its May decline.
Risk Factors
  • AutoZone shares sank 21% in May following disappointing quarterly earnings that missed Wall Street expectations.
  • Revenue grew only 8.4% year over year to $4.84 billion, while same-store sales growth slowed significantly to 4.1% domestically and 1.6% internationally.
  • Profit growth lagged behind revenue expansion, with net income of $641 million representing a mere 5.4% increase from the prior year.
  • Rising inflationary costs are pressuring profit margins as domestic same-store sales growth struggles to keep pace with input costs.
  • Investors are concerned about weak international sales and the company's expansion in Mexico and Brazil, where it operates 157 stores in Brazil and 933 stores in Mexico.
  • Lagging same-store sales growth in international markets signals potential weaker brand performance compared to the United States.
  • The Motley Fool Stock Advisor team did not include AutoZone in their recent list of 10 best stocks to buy now.
Full Analysis
AutoZone (NYSE: AZO) shares fell 21% in May following disappointing quarterly earnings released for the period ending May 9th. Revenue grew 8.4% year over year to $4.84 billion, slightly missing Wall Street expectations, while same-store sales growth slowed to 4.1% domestically and 1.6% internationally in constant currency. The company reported net income of $641 million, a 5.4% increase from the prior year, though profit growth lagged behind revenue expansion. Management spent $586 million on share repurchases last quarter, reducing shares outstanding by approximately 90% from their peak at the turn of the century. The stock decline is attributed to weak international sales and concerns over the company's expansion in Mexico and Brazil, where it operates 157 stores in Brazil and 933 stores in Mexico. Investors are worried that same-store sales growth lagging in these markets could signal weaker brand performance compared to the United States. Additionally, rising inflationary costs have pressured profit margins as domestic same-store sales growth struggles to keep pace with input costs. Despite the stock drop, AutoZone now trades at a price-to-earnings ratio of 21, down from a peak of 30 in 2025, which analysts view as more reasonable for a slow-growth business. The company continues its share repurchase program, which will become even more impactful on reducing share count as the stock price falls. While some investors see the dip as an attractive entry point for those believing in AutoZone's steady expansion in the United States and Latin America, others note that the Motley Fool Stock Advisor team did not include AutoZone in their recent list of 10 best stocks to buy now.