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AutoZone Inc (AZO)
NYSE:AZO
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AutoZone
(NYSE:AZO)
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Rating:67Neutral
Price Target:
$4,212.00
▲(18.22% Upside)
Action:ReiteratedDate:03/03/26
The score is driven primarily by solid operating performance and cash generation, tempered by balance-sheet leverage/negative equity risk. Technicals are supportive with a clear uptrend and constructive momentum. Valuation is less supportive at ~27x earnings, and the earnings call points to continued growth and investment but with meaningful near-term margin/EPS headwinds from expected LIFO charges and weaker reported free cash flow timing.
Positive Factors
High and Stable Gross & Operating Margins
Sustained ~52% gross margins and healthy EBIT/EBITDA margins reflect durable pricing power, effective category mix and scale supply-chain economics. These margin characteristics support long-term cash generation capacity and resilience through industry cycles.
Extensive Store Footprint & Accelerating Expansion
A ~7,700-store global network and accelerated openings materially deepen market coverage in a fragmented industry, creating structural advantage via convenience, scale purchasing, and distribution leverage. New-store productivity exceeding models supports durable roll‑out economics.
Growing Commercial Segment & Supply‑Chain Buildout
Expanding commercial programs and Mega Hub network increase recurring, higher‑frequency sales to pros and improve fill rates. Structural supply‑chain investments lift service levels and share gains, supporting sustainable revenue mix improvement and margin resilience over time.
Negative Factors
High Leverage / Negative Equity
Negative equity and elevated leverage reduce financial flexibility, increase sensitivity to interest costs and limit maneuverability for large buybacks or M&A. Over a multi‑quarter horizon, this structural constraint can raise refinancing risk if cash generation alters or rates move higher.
Persistent Large LIFO Charges Compress Reported Earnings
A multi‑quarter, recurring ~$60M LIFO drain meaningfully depresses reported gross margins and EPS, complicating performance comparability and metric reliability. Over time these non‑cash charges can obscure operating trends and raise stakeholder scrutiny of reported profitability.
Free Cash Flow Pressure From Heavy CapEx & Working Capital
Aggressive near‑term CapEx (~$1.6B FY) and inventory/working‑capital builds for expansion lower free cash flow and compress cash conversion. If sustained, this reduces internal funding for debt paydown or buybacks and increases reliance on external financing during slower quarters.
AutoZone (AZO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$59.03B
Dividend YieldN/A
Average Volume (3M)139.90K
Price to Earnings (P/E)33.3
Beta (1Y)0.29
Revenue Growth3.81%
EPS Growth-4.26%
CountryUS
Employees75,600
SectorConsumer Cyclical
Sector Strength84
IndustryAuto - Parts
Share Statistics
EPS (TTM)27.63
Shares Outstanding16,567,822
10 Day Avg. Volume160,978
30 Day Avg. Volume139,903
Financial Highlights & Ratios
PEG Ratio-8.65
Price to Book (P/B)-20.65
Price to Sales (P/S)3.72
P/FCF Ratio39.38
Enterprise Value/Market Cap1.18
Enterprise Value/Revenue3.55
Enterprise Value/Gross Profit6.84
Enterprise Value/Ebitda16.61
Forecast
1Y Price Target
$4,232.42Price Target Upside18.79% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering20
EPS Forecast (FY)149.46
Revenue Forecast (FY)$20.52B
AutoZone Business Overview & Revenue Model
Company DescriptionAutoZone, Inc. retails and distributes automotive replacement parts and accessories. The company offers various products for cars, sport utility vehicles, vans, and light trucks, including new and remanufactured automotive hard parts, maintenance items, accessories, and non-automotive products. Its products include A/C compressors, batteries and accessories, bearings, belts and hoses, calipers, chassis, clutches, CV axles, engines, fuel pumps, fuses, ignition and lighting products, mufflers, radiators, starters and alternators, thermostats, and water pumps, as well as tire repairs. In addition, the company offers maintenance products, such as antifreeze and windshield washer fluids; brake drums, rotors, shoes, and pads; brake and power steering fluids, and oil and fuel additives; oil and transmission fluids; oil, cabin, air, fuel, and transmission filters; oxygen sensors; paints and accessories; refrigerants and accessories; shock absorbers and struts; spark plugs and wires; and windshield wipers. Further, it provides air fresheners, cell phone accessories, drinks and snacks, floor mats and seat covers, interior and exterior accessories, mirrors, performance products, protectants and cleaners, sealants and adhesives, steering wheel covers, stereos and radios, tools, and wash and wax products, as well as towing services. Additionally, the company provides a sales program that offers commercial credit and delivery of parts and other products; sells automotive diagnostic and repair software under the ALLDATA brand through alldata.com and alldatadiy.com; and automotive hard parts, maintenance items, accessories, and non-automotive products through autozone.com. As of November 20, 2021, it operated 6,066 stores in the United States; 666 stores in Mexico; and 53 stores in Brazil. The company was founded in 1979 and is based in Memphis, Tennessee.
How the Company Makes MoneyAutoZone primarily generates revenue through the sale of automotive parts, accessories, and maintenance supplies. The company's revenue model is built on two key segments: retail sales to individual consumers and commercial sales to professional mechanics and repair shops. Retail sales typically contribute the majority of the revenue, driven by the extensive range of products available in-store and online. The commercial segment, although smaller, has been growing steadily as AutoZone focuses on building relationships with local businesses through delivery services and dedicated sales representatives. Additionally, the company's online platform enhances convenience for customers, allowing for increased sales through e-commerce. AutoZone also benefits from a loyalty program that encourages repeat purchases. The company's strong supply chain and distribution network, along with strategic partnerships with suppliers and manufacturers, further contribute to its profitability.
AutoZone Key Performance Indicators (KPIs)
Any
Store Count by Geography
Shows the distribution of stores across different regions, highlighting market penetration, regional growth opportunities, and potential exposure to local economic conditions.
Shows the distribution of stores across different regions, highlighting market penetration, regional growth opportunities, and potential exposure to local economic conditions.
Data provided by:
The Fly
The FlyAutoZone Earnings Call Summary
Earnings Call Date:Mar 03, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:May 26, 2026
Earnings Call Sentiment Positive
The call highlights healthy top-line growth, accelerating store expansion, strong commercial momentum, FX tailwinds, and disciplined long-term investments that are already delivering share gains and improved productivity. Key near-term negatives are sizeable non-cash LIFO charges materially depressing reported margins and EPS, a notable decline in quarterly free cash flow (timing and higher CapEx), traffic weakness, and SG&A deleverage as investments ramp. Management emphasized adjusted earnings growth, confidence in the investment payoff, and expectations for recovery in transactions and margins as stores mature, leading to a generally constructive outlook despite identifiable near-term accounting and timing headwinds.Q2-2026 Updates
Positive Updates
Top-Line Revenue Growth
Total sales of $4.3 billion, up 8.1% year-over-year; total company same store sales +3.3% on a constant currency basis.
Strong Domestic Performance
Domestic same store sales +3.4%; domestic commercial sales +9.8%; domestic DIY same store sales +1.5%; commercial represented ~32% of domestic auto parts and ~27% of total company sales.
International Results and FX Tailwind
International same store sales +2.5% constant currency; unadjusted international comps +17.1% (FX positively impacted comps by ~15 points); peso strength provided a $74M sales tailwind, $23M EBIT tailwind and ~$0.95 EPS benefit versus prior year.
Store Growth and Productivity
Opened 64 stores in the quarter (vs 45 a year ago); company now has 6,709 U.S., 913 Mexico and 152 Brazil stores; trailing four-quarter openings 342 vs 241 prior; on track to open ~350–360 stores for the full year (vs 304 prior year). New stores are exceeding sales models.
Commercial Programs & Mega Hub Expansion
6,310 total commercial programs (programs in 94% of domestic stores); average weekly sales per program $15,400, up 4.8%; opened 5 Mega Hubs in the quarter (142 total) with plans to target ~300 at full build-out; Mega Hubs and hubs improving parts availability and driving share gains.
Adjusted Earnings Strength
Reported EPS $27.63, down 2.3% GAAP; excluding a $59M non-cash LIFO charge, EPS would have been up ~7.1% and EBIT would have grown ~7.2% (LIFO was a material non-cash drag).
Capital Investment and Shareholder Returns
Investing nearly $1.6B in CapEx for FY2026 (similar planned for next year) to accelerate store and supply-chain growth; repurchased $311M of stock in the quarter and $1.4B remaining authorization.
Operational Leverage and Supply-Chain Progress
Ongoing supply-chain investments (new DCs in Brazil and Monterrey), Supply Chain 2030 project near completion, improvements in delivery times and satellite store inventory driving commercial growth and service levels.
Negative Updates
Material LIFO Charges Impacting Margins and EPS
Non-cash LIFO charge of $59M in Q2 materially depressed gross margin and EPS; company expects roughly $60M LIFO charge in each remaining quarter (total estimated LIFO this year ~$277M vs $64M prior year), with Q3 LIFO estimated to reduce EPS by ~$2.75 and gross margin ~125 bps.
Gross Margin and GAAP Profit Pressure
Reported gross margin 52.5%, down 137 basis points year-over-year; total company EBIT down 1.2% and net income down 3.9% versus prior year (though adjusted metrics exclude LIFO).
Free Cash Flow Decline
Q2 free cash flow $15M versus $291M a year ago; year-to-date FCF $645M versus $856M prior year, with lower quarterly FCF attributed to higher CapEx and payables timing.
Traffic and Transaction Weakness
DIY traffic declined ~3.6% and traffic weakness similar to Q1; transaction softness observed—commercial transactions were meaningfully impacted late in the quarter due to winter storms (weeks 10–11 commercial up ~1% vs >12% for the other 10 weeks).
SG&A Deleverage from Investments
SG&A increased 8.7% year-over-year, deleveraging SG&A as a percent of sales by ~18 basis points driven by investments to support accelerated store and hub growth; SG&A per store up 3.9% YoY.
Inventory Build and Working Capital Changes
Inventory per store up 8.1% YoY and total inventory up 13.1% YoY driven by new stores, inventory investment and inflation; net inventory (merchandise less payables) -$105K vs -$161K year ago and accounts payable as % of inventory down to 110.9% from 118.2%.
Near-Term Guidance Headwinds
Management expects continued tariff-driven cost pressure and LIFO impacts in upcoming quarters; tax rate trending higher (Q2 tax rate 20.7% vs 18.4% prior; Q3 model ~22.9%); weather disrupted end-of-quarter commercial results.
Macro/Regional Challenges
Soft macro in Mexico causing slower international sales growth (constant-currency comps +2.5%); regionally, Mid‑Atlantic, South Atlantic and West Coast underperformed DIY comps due to weather variances and milder conditions in some areas.
Company Guidance
AutoZone guided that Q3 will absorb a roughly $60 million non‑cash LIFO charge (they expect ~ $60M LIFO each remaining quarter, ~$277M for FY‑26 vs $64M last year), which management said would reduce EBIT by about $60M, compress gross margin ~125 basis points and lower EPS by ~$2.75; conversely, if current FX holds they expect ~+$75M to revenue, ~+$20M to EBIT and ~+$0.85 to EPS in Q3, and they suggested modeling a Q3 tax rate of ~22.9% and interest expense near $112M (vs $111M last year). Other guideposts: Q3 net new store openings of ~90–95 (350–360 for FY vs 304 last year), FY CapEx of nearly $1.6B (and similar next year), continued expectation that average ticket growth will run sequentially through Q3 and peak in Q4, and the company reiterated strong liquidity/leverage (~2.5x EBITDAR) and ~$1.4B remaining on its buyback authorization after $311M repurchased in Q2.AutoZone Financial Statement Overview
Summary
Strong operating profile with solid gross margin (~52%) and healthy EBIT/EBITDA margins, plus modest positive free cash flow growth. The main offset is balance-sheet risk from high leverage/negative equity, which reduces financial flexibility despite an otherwise resilient operating model.Income Statement
AutoZone has demonstrated consistent revenue growth, with a TTM growth rate of 1.84%. The gross profit margin remains strong at 52.15%, indicating effective cost management. However, the net profit margin has slightly decreased to 12.78% in the TTM, reflecting some pressure on profitability. The EBIT and EBITDA margins are healthy, suggesting robust operational efficiency.75
Positive
Balance Sheet
The balance sheet shows a high debt-to-equity ratio due to negative equity, which poses a risk. Despite this, the company maintains a strong asset base. The return on equity is negative, reflecting the impact of high leverage and negative equity on profitability.60
Neutral
Cash Flow
Cash flow analysis reveals a positive free cash flow growth rate of 3.64% in the TTM, indicating improved cash generation. The operating cash flow to net income ratio is stable, suggesting efficient cash conversion. However, the free cash flow to net income ratio has slightly decreased, indicating potential pressure on cash flow relative to earnings.70
Positive
| Breakdown | TTM | Aug 2025 | Aug 2024 | Aug 2023 | Aug 2022 | Aug 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 19.61B | 18.94B | 18.49B | 17.46B | 16.25B | 14.63B |
| Gross Profit | 10.17B | 9.97B | 9.82B | 9.07B | 8.47B | 7.72B |
| EBITDA | 4.19B | 4.22B | 4.35B | 3.98B | 3.72B | 3.36B |
| Net Income | 2.45B | 2.50B | 2.66B | 2.53B | 2.43B | 2.17B |
Balance Sheet | ||||||
| Total Assets | 20.40B | 19.36B | 17.18B | 15.99B | 15.28B | 14.52B |
| Cash, Cash Equivalents and Short-Term Investments | 285.49M | 271.80M | 298.17M | 277.05M | 264.38M | 1.17B |
| Total Debt | 12.08B | 12.29B | 12.37B | 10.93B | 9.30B | 8.23B |
| Total Liabilities | 21.97B | 22.77B | 21.93B | 20.34B | 18.81B | 16.31B |
| Stockholders Equity | -1.56B | -3.41B | -4.75B | -4.35B | -3.54B | -1.80B |
Cash Flow | ||||||
| Free Cash Flow | 1.56B | 1.79B | 1.93B | 2.14B | 2.54B | 2.90B |
| Operating Cash Flow | 2.67B | 3.12B | 3.00B | 2.94B | 3.21B | 3.52B |
| Investing Cash Flow | -1.16B | -1.40B | -1.29B | -876.18M | -648.10M | -601.78M |
| Financing Cash Flow | -1.52B | -1.75B | -1.68B | -2.06B | -3.47B | -3.50B |
AutoZone Technical Analysis
Negative
3562.85
Price Trends
3636.88
Negative
3669.69
Negative
3806.46
Negative
Market Momentum
-10.82
Positive
42.50
Neutral
24.55
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AZO, the sentiment is Negative. The current price of 3562.85 is below the 20-day moving average (MA) of 3722.40, below the 50-day MA of 3636.88, and below the 200-day MA of 3806.46, indicating a bearish trend. The MACD of -10.82 indicates Positive momentum. The RSI at 42.50 is Neutral, neither overbought nor oversold. The STOCH value of 24.55 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AZO.
AutoZone Risk Analysis
AutoZone disclosed 22 risk factors in its most recent earnings report. AutoZone reported the most risks in the "Production" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
AutoZone Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
68 Neutral | $7.49B | 12.73 | 9.42% | 4.00% | -3.71% | -0.27% | |
67 Neutral | $59.03B | 33.35 | -80.28% | ― | 3.81% | -4.26% | |
65 Neutral | $3.10B | 18.56 | 14.34% | ― | 7.94% | 34.84% | |
62 Neutral | $10.47B | 35.20 | 4.80% | 1.24% | 0.08% | -83.69% | |
62 Neutral | $76.76B | 30.60 | -239.04% | ― | 6.19% | 6.98% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
53 Neutral | $806.33M | 10.25 | 11.76% | 3.32% | 23.96% | 11.01% |
* Consumer Cyclical Sector Average
AZO
AutoZone
3,562.85
-51.42
-1.42%
BWA
BorgWarner
50.56
22.15
77.95%
DORM
Dorman Products
102.81
-22.19
-17.75%
LKQ
LKQ
29.34
-11.39
-27.96%
ORLY
O'Reilly Auto
91.54
2.29
2.57%
SMP
Standard Motor Products
36.41
11.32
45.10%
AutoZone Corporate Events
Executive/Board ChangesShareholder Meetings
AutoZone Shareholders Reelect Board and Approve Key Proposals
Positive
Dec 19, 2025
At its annual meeting of shareholders held on December 17, 2025, AutoZone shareholders elected 11 directors to serve until the 2026 annual meeting, with each nominee receiving more votes for than against, signaling continued investor support for the company’s current board composition and strategic direction. Shareholders also ratified Ernst & Young LLP as the independent auditor for the 2026 fiscal year and approved, on a non-binding advisory basis, the compensation of the company’s named executive officers, reinforcing confidence in AutoZone’s financial oversight and executive pay practices.
The most recent analyst rating on (AZO) stock is a Buy with a $4100.00 price target. To see the full list of analyst forecasts on AutoZone stock, see the AZO Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.