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AutoZone (AZO) Stock Sinks As Market Gains: What You Should Know

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In the latest trading session, AutoZone (AZO - Free Report) closed at $2,033.48, marking a -0.73% move from the previous day. This change lagged the S&P 500's 0.08% gain on the day. At the same time, the Dow lost 0.56%, and the tech-heavy Nasdaq lost 0.42%.

Prior to today's trading, shares of the auto parts retailer had gained 1.85% over the past month. This has outpaced the Retail-Wholesale sector's loss of 3.94% and the S&P 500's gain of 0.22% in that time.

Wall Street will be looking for positivity from AutoZone as it approaches its next earnings report date. The company is expected to report EPS of $17.91, up 19.96% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $3.17 billion, up 8.74% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $107.41 per share and revenue of $15.54 billion. These totals would mark changes of +12.84% and +6.19%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for AutoZone. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.76% higher within the past month. AutoZone is currently a Zacks Rank #1 (Strong Buy).

In terms of valuation, AutoZone is currently trading at a Forward P/E ratio of 19.07. For comparison, its industry has an average Forward P/E of 18.61, which means AutoZone is trading at a premium to the group.

Also, we should mention that AZO has a PEG ratio of 1.73. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Automotive - Retail and Wholesale - Parts was holding an average PEG ratio of 1.42 at yesterday's closing price.

The Automotive - Retail and Wholesale - Parts industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 28, which puts it in the top 11% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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