What changed
$AZO — Sells auto parts and provides vehicle repair services.
🎯 Q1 FY26 | Rev $4B | EPS $27.63 vs $27.29 🟢 | Margin 16.3%
💡 Consensus expected EPS of $27.29, but AZO delivered $27.63, a 1.24% beat. However, EPS declined 2.3% YoY despite 8.1% revenue growth, due to higher SG&A and capex. The market may be too focused on the beat and ignoring margin compression and rising capex. The gap is that the beat is not a sign of accelerating earnings power.
🏢 Business Quality: 8/10 | Valuation: fair
📉 Reward/Risk: Upside 5% to $3300 (22x forward EPS) vs downside 15% to $2700 (18x forward EPS). Ratio 0.33:1, unfavorable.
🔮 Catalyst: Next earnings report (late May 2026). Watch: same-store sales growth (domestic) and operating margin. Failure signal: same-store sales <2% or operating margin <15.5%.
💰 Entry: Current price $3137.75 is near the high end of its 52-week range.
Also in play: $PPG $SHW $AXTA $RPM $VAL $BASFY