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

Zacks Equity Research

AutoZone (AZO) closed at $1,077.23 in the latest trading session, marking a +1.76% move from the prior day. This change outpaced the S&P 500's 0.64% gain on the day. Meanwhile, the Dow gained 0.57%, and the Nasdaq, a tech-heavy index, added 0.6%.

Heading into today, shares of the auto parts retailer had lost 8.5% over the past month, lagging the Retail-Wholesale sector's loss of 4.12% and the S&P 500's loss of 1.87% in that time.

AZO will be looking to display strength as it nears its next earnings release. On that day, AZO is projected to report earnings of $13.95 per share, which would represent year-over-year growth of 3.56%. Meanwhile, our latest consensus estimate is calling for revenue of $2.76 billion, up 4.61% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $65.22 per share and revenue of $12.13 billion. These totals would mark changes of +2.82% and +2.23%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for AZO. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 0.52% lower within the past month. AZO is currently a Zacks Rank #3 (Hold).

Valuation is also important, so investors should note that AZO has a Forward P/E ratio of 16.23 right now. This valuation marks a discount compared to its industry's average Forward P/E of 17.9.

Meanwhile, AZO's PEG ratio is currently 1.33. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Automotive - Retail and Wholesale - Parts industry currently had an average PEG ratio of 1.46 as of yesterday's close.

The Automotive - Retail and Wholesale - Parts industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 185, putting it in the bottom 28% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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.

You can find more information on all of these metrics, and much more, on Zacks.com.

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