Why Autozone Stock Dropped Today

The Motley Fool · 1d ago

Key Points

  • Advance Auto Parts beat on earnings but missed -- barely -- on sales today.

  • Investors are worried consumers may be getting too financially strapped to pay to keep up their cars.

Shares of car parts retailer Autozone (NYSE: AZO) slipped 4.4% through 12:25 p.m. ET Thursday after its smaller rival Advance Auto Parts (NYSE: AAP) reported stronger-than-expected earnings -- but missed on sales and issued weak guidance this morning.

Two huge red arrows going down on a stock chart.

Image source: Getty Images.

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What Advance Auto Parts said

Analysts expected Advance Auto Parts to earn $0.81 per share in the quarter, and it beat that number, reporting a $1.03 per share profit. Problem was, Advance's $2 billion in sales fell just short of expectations for $2.04 billion.

Worse, Advance said full-year sales missed Wall Street's $8.6 billion forecast. And now investors are wondering if this means Autozone, too, might have bad news to report when its own earnings come out next month. (Sept. 22, to be precise.)

What's next for Autozone

After all, according to a running tally kept by Yahoo! Finance, Advance Auto Parts had been on something of a roll, beating earnings forecasts seven straight quarters in a row (including this one), versus just two wins in a row for Autozone. If something has happened to break Advance's winning streak, it's logical to worry that the same might hold true for Autozone.

And yet, I would not worry.

Why not? Well, for one thing, the $8.53 billion in sales Advance is forecasting for fiscal 2026 isn't too far off from the $8.58 billion that Wall Street was looking for, for one thing. Also, Advance reaffirmed that things are going basically according to plan this year -- which suggests the same might hold true for Autozone.

Speaking of which, at a valuation of only 21.1 times earnings, Autozone already looks like a better bargain than Advance stock, which costs nearly 51 times earnings. If I had to own only one auto parts stock, I'd pick Autozone over Advance.

Rich Smith 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.