AutoZone reported fiscal fourth quarter earnings this morning, and the stock is up about 2% premarket even though the number that usually drives this stock, same-store sales, badly missed. The gap between those two facts is the actual story.
What did AutoZone report for its fiscal fourth quarter?
AutoZone beat on earnings and missed on sales. Diluted EPS came in at $56.05, topping the roughly $54.30 Street estimate by $1.76. Net sales rose 5.6% year over year to $6.59 billion, short of the $6.7 billion consensus. Total company same-store sales grew just 1.5% on a constant currency basis, domestic same-store sales rose 1.6%, both far below what analysts had modeled.
The company's own release confirms the EPS and same-store sales figures, along with $20.3 billion in full-year sales.
Why did the stock rise if same-store sales missed by more than half?
The earnings beat was a margin story, not a demand story. Gross margin hit 53.3%, up 182 basis points year over year. Of that expansion, 145 basis points came from tariff refunds and 105 basis points from a non-cash LIFO swing, partly offset by a higher-margin-diluting shift toward commercial sales. None of the beat came from selling more parts.
AutoZone's release breaks out both the tariff-refund and LIFO components of that margin swing. Tariff refunds and LIFO adjustments are accounting and trade-policy items, not demand signals. A quarter built on those two levers tells you little about whether customers are actually buying more.
Why has AutoZone stock fallen 34% from its high this year?
AutoZone shares are down roughly a third from their 2026 high, a decline tied directly to the same margin pressure that just reversed for one quarter. The stock traded above $4,300 earlier this year and slid toward $2,834, its 52-week low, right before this report, as tariff costs and softer demand weighed on the outlook.
AutoZone traded near a 52-week high above $4,300 earlier this year before sliding toward $2,834, its 52-week low, heading into this print. The slide tracked a real worry: tariffs raising the cost of imported parts and squeezing margin quarter after quarter, on top of softer demand in Mexico and Brazil. Wells Fargo cut its price target to $3,500 from $4,150 on September 10, citing that same margin pressure.
Did the Q4 beat change any analyst's mind?
No. Citi trimmed its price target even after seeing the beat, which is not the reaction a genuine turnaround usually earns. The firm kept a Buy rating but pointed to the same weak-demand backdrop that has weighed on the stock all year.
Citi trimmed its target to $3,500 from $3,787 even after the print, still rating the stock Buy but flagging a weaker-demand environment: lower-income consumers deferring big-ticket maintenance and pulling back on discretionary DIY spending.
What should traders actually watch next quarter?
Tariff refunds and LIFO swings are one-time or cyclical, not repeatable margin drivers. The number that actually matters is whether same-store sales climb back toward the 3.8% the Street originally wanted, not the 1.5% just posted. If margin normalizes lower next quarter without sales growth showing up, this quarter's pop was a gift, not a turn.
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