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O'Reilly Automotive's stock sank by 20 percent Wednesday after the auto parts retailer reported weaker-than-expected same-store-sales growth.
Other auto parts retailer stocks also fell sharply.
The company announced comparable-store sales growth of 1.7 percent for the second quarter, below its previous guidance of 3 to 5 percent growth and FactSet's estimated growth of 3.9 percent. O'Reilly's stock plunge made it the biggest decliner in the S&P 500 index, and it was on track to be its worst daily performance ever.
"The comparable store sales shortfall will also have a consequent impact on our operating profitability," putting in doubt whether the company will hit its other targets, O'Reilly CEO Greg Henslee said in a statement.
O'Reilly shares had already been struggling over the 12 months entering Wednesday's session, losing more than a third of their value in that time.
News of O'Reilly's disappointing sales also weighed on shares of Advance Auto Parts and AutoZone, which fell 14 percent and 9.5 percent, respectively.
Auto parts retailers have a "significant moat" around their business defending against ecommerce giant Amazon, said Brian Nagel, a senior equity research analyst at Oppenheimer & Co., during Wednesday's "Power Lunch. " "But what's happening right now in terms of sentiment within retail stocks is no one wants to discount the power of Amazon anymore."
The three auto parts retailers have missed their targets for the last several quarters, according to Ali Faghri, a senior research analyst at Susquehanna Financial.
"Sales growth has slowed over the last four-to-six quarters," he said. "That's led to most of these companies missing Street expectations or missing guidance."
One reason Faghri cited was mild weather over the past two years, saying the companies are dependent on harsh winters to drive sales. Car parts companies also depend on sales to people who own older cars and the "number of those vehicles is at a trough" Faghri said.
The movement of the stocks is "overdone," Nagel said. "These very healthy businesses are trading now at valuations we haven't seen in a long time. The problem with this market is there is a big concern with anything that is physical retail."
Regarding a merger, Nagel said right now that is unlikely, but if the sales weakness turns out to be structural instead of cyclical, that could change.