Why AutoZone (AZO) Stock Is Down Today

NEW YORK (TheStreet) -- Autozone (AZO) shares are down 0.6% to $505.39 on Thursday after being downgraded to "hold" from "buy" by Argus Research.

The downgraded outlook comes days after the auto parts retailer posted a disappointing 2.1% rise in August comparable-store sales despite auto sales rising 5.4% during the same period.

The auto industry sold 1.58 million vehicles in August, the highest one month total it has had since 2003 when 1.63 million vehicles were sold.STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Separately, TheStreet Ratings team rates AUTOZONE INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate AUTOZONE INC (AZO) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, expanding profit margins and increase in net income. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • AUTOZONE INC has improved earnings per share by 8.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, AUTOZONE INC increased its bottom line by earning $31.66 versus $27.88 in the prior year. This year, the market expects an improvement in earnings ($35.48 versus $31.66).
  • The gross profit margin for AUTOZONE INC is rather high; currently it is at 54.90%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 12.25% is above that of the industry average.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Specialty Retail industry average. The net income increased by 0.7% when compared to the same quarter one year prior, going from $371.20 million to $373.67 million.
  • AZO, with its decline in revenue, slightly underperformed the industry average of 0.1%. Since the same quarter one year prior, revenues slightly dropped by 1.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • You can view the full analysis from the report here: AZO Ratings Report
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