Wall Street wasn't exactly happy with AutoZone's (AZO +0.80%) latest quarterly earnings. The stock initially dipped 9% on the close miss, but has since rebounded slightly as of this writing. Analysts' disappointment in the quarter really doesn't tell the whole story. So should investors buy this dip? Let's have a look.
NYSE: AZO
Key Data Points
The auto parts retailer reported sales of $4.84 billion in the fiscal third quarter of 2026, slightly lower than analyst estimates of $4.87 billion. This is what triggered the decline in stock price, but it is likely an overreaction.
Same-store sales were up 5.5% year over year, and earnings per share hit $38.07. AutoZone is also generating substantial cash flow. The company is expanding steadily and now has 7,856 locations, adding 340 stores in the past year.
Image source: Getty Images.
International growth slowed in this latest quarter, but AutoZone still plans to open 355 to 365 new stores this fiscal year. That guidance remained intact.
For long-term investors, AutoZone is still a solid buy. While individual shares currently cost more than $3,000, the valuation metrics are attractive. With a forward P/E ratio of just over 17 and a PEG ratio of 1.42, AutoZone is fairly priced. Analysts also have an average price target of nearly $4,100 per share, which the company is currently trading well below.
Investors in AutoZone shouldn't expect massive swings in either direction; the stock's beta is just 0.44. Yet, AutoZone is still a solid long-term investment.
