What Happened?

Shares of auto parts and accessories retailer AutoZone (NYSE: AZO) fell 2.7% in the afternoon session after a Morgan Stanley report highlighted potential headwinds for the company, including tariffs and increased investments in business operations. The investment bank pointed to tariffs, which are taxes on imported goods, as a potential factor that could increase costs. The report also noted that AutoZone's own investments in selling, general, and administrative expenses—the day-to-day costs of running the business—could create challenges. Despite these concerns, the analysis acknowledged that the company could still see benefits from favorable long-term trends within the auto parts industry.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy AutoZone? Access our full analysis report here.

What Is The Market Telling Us

AutoZone’s shares are not very volatile and have had no moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 2 months ago when the stock dropped on the news that the company reported third-quarter results that missed Wall Street's profit estimates. 

While the auto parts retailer's sales of $6.24 billion were in line with forecasts, its earnings per share came in at $48.71, falling short of the $50.68 consensus estimate. Digging deeper into the results, the company's profitability showed signs of pressure, with its operating margin declining to 19.2% from 20.9% in the same period last year. The market reacted negatively to the news, as the earnings miss and shrinking profitability raised concerns among investors about the company's performance.

AutoZone is up 18.5% since the beginning of the year, but at $3,850 per share, it is still trading 11.6% below its 52-week high of $4,355 from September 2025. Investors who bought $1,000 worth of AutoZone’s shares 5 years ago would now be looking at an investment worth $3,341.

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