AutoZone stock forecast after exceeding FQ1 expectations

By:
on Dec 7, 2021
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  • AutoZone shares on Tuesday rocketed more than 6%.
  • The company announced its most recent quarterly results before markets opened.
  • AutoZone smashed expectations on revenue and GAAP earnings per share.

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On Tuesday, AutoZone Inc. (NYSE:AZO) shares skyrocketed by more than 6% after reporting its most recent quarterly results. The company announced its fiscal first-quarter 2022 revenue and earrings before markets opened, beating the consensus for analyst expectations.

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AutoZone posted FQ1 GAAP earnings per share of $25.69, outperforming the average analyst estimate of $20.96. On the other hand, revenue for the quarter increased by 16.5% from the same quarter last year to $3.67 billion, surpassing the consensus Street expectation by $290 million.

Should you bet on AutoZone’s growth?

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From an investment perspective, Autozone shares trade at reasonable trailing 12-month and forward P/E ratios of 21.03 and 18.13, respectively. Therefore, the stock could be an interesting option for value investors.

On the other hand, analysts expect its earnings per share to increase by 32.30% this year, before rising at an average annual rate of about 14% over the next five years. 

Therefore, AutoZone could also gain the attention of long-term growth investors.

Source – TradingView

Technically, AutoZone shares seem to have recently spiked to retest the trendline resistance of the ascending channel formation. As a result, the stock has rallied closer to the overbought conditions of the 14-day RSI.

Therefore, investors could target short-term technical pullbacks at about $1,917, or lower at $1,811, while $2,080 and $2,191 are crucial resistance zones.

In summary, although AutoZone looks like an exciting long-term buy, the post-earnings spike in the stock price could be a great opportunity to take some profits.

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