AutoZone, Inc. (AZO) Prepares to Release its Earnings

AutoZone, Inc. (AZO) distributes and sells automotive accessories as well as replacement parts in the United States. The stock is currently trading around $690.18 at the upper end of its 52 week range of $491.93-$705.00. The stock has been outperforming the market this year rallying 11.75% year to date. AZO is scheduled to report earnings before the bell on Tuesday the 26th, and the stock is selling off ahead of the release. AZO is lower on the session by around $1.21 ahead of the holiday weekend.

Over the past 12 quarters DE has rallied on earnings day 8 times with an average move of 2.14%. The stock has also rallied 8 times in 12 quarters from earnings day to the nearest options expiration. AZO also appears bullish on a chart going into the release. The stock has been trading above the Ichimoku Cloud since mid-February, and looks as if it could continue higher in today’s session. The Ichimoku Cloud appears to be growing in size indicating a trend that is harder to reverse. This cloud continues 26 bars in the future shrinking only slightly in size still indicating a bullish outlook. Due to the stock’s historical performance on earnings day and strong technical data, it is hard to justify anything but a bullish trade in AZO.

The options market is currently implying a move of around $32 or 4.6% in AZO by next Friday’s close giving us an upside target around $722.18.