AutoZone Stock Is Testing Highs After Strong Q3 Earnings

AutoZone, Inc. (AZO) shares rose over 1% during Tuesday’s session after the company posted better-than-expected financial results for the third quarter. A stable income for the quarter, beating the consensus estimates of $ 130 million, while the net profit came in at $14.39 per share, beating estimates of 81 cents.

Sales in comparable stores declined 1% during the third quarter, which was better than the 6.3% drop that analysts expected. The retailer added that same-store sales turned significantly positive during the past four weeks, as the stimulus checks has begun to circulate in the economy. Gross margins were steady at 53.6% of sales, which suggests that the price cuts were not responsible for the increase in revenues, while inventories have increased by 2.7% compared to the same period a year ago.

CFRA has reiterated its strong Buy rating on AutoZone stock and lifted its price target from $1,250 to $1,275 the following financial results. Analyst Garrett Nelson believes that the record number of vehicles in the UNITED states at the age (11.8 years) will drive secular demand and notes the course of the history of the outperformance during recessions.


From a technical point of view, the AutoZone stock briefly broke out above the reaction highs from early March, before giving up ground later in the session. The relative strength index (RSI) moved into overbought levels with a reading of 69.06, but the moving average convergence divergence (MACD) remains bullish. These indicators suggest that the stock could see a brief period of consolidation before moving higher.

Traders should watch for a breakout from the reactions of high of of 1 166.20 in the coming sessions. If this occurs, operators may see a trend to the trend line resistance near$1,250 .00 or a move to retest earlier highs of $1 274.41. If the stock breaks down, traders should watch for the trend line of support around$1,072 .00, although move lower seems less likely to occur given the bullish momentum.

The author holds no position in the stock(s) mentioned except through the passive management of index funds.


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