AutoZone Stumbles on Earnings but Drives Past Revenue Targets—Wall Street Shrugs, As Usual

AutoZone’s Q3 earnings hit a pothole—missing analyst forecasts—while sales cruised past expectations. Another quarter, another mixed bag for the auto parts giant.

Revenue beats? Check. Profit shortfall? Of course. Because why give investors clarity when you can keep them guessing?

The market’s reaction? A collective meh. Shares barely budged—proof that even ’misses’ get a free pass in this everything-goes rally. Priorities: growth over profits, hype over fundamentals. Classic 2025.

TLDR

• Q3 earnings per share missed estimates at $35.36 vs. $36.78 expected

• Net sales rose 5.4% to $4.46 billion, topping estimates

• Domestic same-store sales increased 5%

• Store count expanded to over 7,500 locations globally

• $250 million in share repurchases completed during the quarter

AutoZone Inc. (NYSE: AZO) stock was trading at $3,684.38 as of 2:17 PM EDT, down 3.71%, after the company released its fiscal third-quarter 2025 (ended May 10, 2025) earnings report.

AutoZone, Inc. (AZO)

While AutoZone missed Wall Street earnings expectations, sales figures came in slightly above consensus, reflecting continued strength in demand and expansion efforts.

Earnings Miss but Sales Grow

AutoZone reported Q3 earnings of $35.36 per share, falling short of the Zacks Consensus Estimate of $36.78 and lower than last year’s $36.69. Despite the earnings miss, net sales reached $4.46 billion, a 5.4% year-over-year increase, surpassing the estimated $4.4 billion. Gross profit rose to $2.35 billion from $2.26 billion, showing resilience in its Core operations.

AutoZone CEO: "..our gross margins were pressured this quarter.."

Q3 Results:
—Net sales: +5.4% to 4.5B
—Net income: -6.6% to 608.4M
—Domestic same-store sales: +5.0%
—Int’l same-store sales (CC): +8.1%
—Inventory: +10.8% yoY$AZO pic.twitter.com/oPNuiE28VV

— The Transcript (@TheTranscript_) May 27, 2025

Domestic and International Expansion

Domestic commercial sales climbed to $1.27 billion, up from $1.14 billion in the prior-year quarter, with domestic same-store sales rising 5%. AutoZone aggressively expanded its footprint, opening 54 new U.S. stores, 25 in Mexico, and five in Brazil. As of May 10, 2025, the company operated 6,537 U.S. stores, 838 in Mexico, and 141 in Brazil, bringing the global total to 7,516 locations.

Inventory, Cash, and Debt Update

Inventory grew 10.8% year over year, supporting both new store openings and same-store initiatives. Net inventory per store stood at negative $142,000, slightly improved from negative $168,000 a year earlier. Cash and cash equivalents fell to $268.6 million from $298.2 million as of August 31, 2024. Total debt decreased slightly to $8.85 billion compared to $9.02 billion at the end of fiscal 2024.

Share Repurchases and Institutional Investments

AutoZone repurchased 70,000 shares during the quarter for $250.3 million, averaging $3,571 per share. The company still has $1.1 billion available under its current buyback authorization. Woodline Partners LP disclosed a new $3.25 million investment, acquiring 1,015 shares. Other institutional investors, including Pittenger & Anderson Inc., Sound View Wealth Advisors, and PDS Planning Inc., also increased their holdings in the stock during the fourth quarter.

Strong Long-Term Performance

AutoZone continues to outperform the market. Its trailing returns, as of May 27, 2025, show a year-to-date gain of 15.06%, crushing the S&P 500’s 0.63%. Over one year, AZO returned 31.92%, compared to the S&P 500’s 11.57%. The three-year and five-year returns were even more impressive, at 79.25% and 216.41%, respectively, easily beating the broader index.

Despite missing on earnings this quarter, AutoZone’s sales momentum, strategic expansion, and shareholder-focused initiatives position it well for future growth. Investors will watch closely how the company balances profitability and growth in the coming quarters.