1. Setup Recap
Original prediction (AZO, before the open): called for a downside reaction (low-to-mid single digits) driven by the risk that profit/margins and the message around costs would matter more than topline.
What the base case expected: not a disaster quarter, but a tape that punishes a miss in a high-priced defensive compounder.
Key evidence emphasis (from the preview framing): downside skew from expectations + sensitivity to cost/margin commentary.
2. Results vs Expectations
Reported results vs consensus:
- EPS missed estimates (31.04 vs 32.03 expected).
- Revenue slightly missed (4.63B vs 4.64B expected).
Guidance and management tone:
- Management commentary emphasized cost pressure (tariff-driven) and continued pricing actions; not a “raised bar” message.
Qualitative surprises:
- The combination of an EPS miss plus cost commentary left little reason for dip buyers to step in on day one.
3. Price Action & Scoreboard
Because this was before-the-open, the scoring window is: prior close → report-day open/close.
- Pre-earnings close: 3766.96
- Reaction-day open: 3694.89
- Reaction-day close: 3496.77
Computed:
- Earnings gap return: -0.01913 (down)
- Session return: -0.07173 (down)
Scoreboard:
- Opening gap direction vs prediction: matched (down).
- Full-session direction vs prediction: matched (down).
- Meaningful reversal: no — it opened lower and sold off further into the close.
4. Options, Flows & Example Structures
Options/vol:
- No auditable post-print IV/skew in the captured sources; not grading vol crush.
Flows / positioning:
- No clean short/borrow updates in-scope.
Example structures:
- The specific structures from the prediction aren’t available in the captured sources; not grading individual spreads.
5. Hindsight on Reasoning & Weights
- Fundamentals: the miss was real (EPS and revenue), and the tape treated it as enough to reprice.
- Narrative: cost pressure mattered — the market didn’t need more proof once the quarter failed the “clean beat” standard.
Weight check:
- Options/expectations downside skew was correctly weighted.
- The move shows that “small miss” can still produce a large session in high-dollar compounders when the tape wants a reset.
6. Lessons & Playbook Updates
Ticker-specific:
- AZO can translate a modest miss into an outsized session when cost commentary keeps uncertainty elevated.
Process tweak:
- For expensive defensives, treat “miss + costs still rising” as a combo that often trends down all day (not just at the open).
Published: