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1. Company Snapshot

1.a. Company Description

AutoZone, 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.

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1.b. Last Insights on AZO

AutoZone's recent performance was driven by strong Q2 earnings, which exceeded market expectations. The company's commercial strength and expansion plans remained intact, with analysts boosting their price forecast following the earnings release. AutoZone's growth story is intact, supported by its ability to sustain growth in difficult times, maintain margins, and provide robust cash flow. Additionally, the company's share buyback activity has been a positive driver, reducing the number of outstanding shares and benefiting shareholders.

1.c. Company Highlights

2. AutoZone's Q1 Earnings: A Mixed Bag

AutoZone, Inc.'s 2026 Q1 earnings per share decreased 4.6% to $31.04, missing analyst estimates of $32.75. However, excluding a non-cash $98 million LIFO charge, EPS would have been up 8.9%. Total sales grew 8.2% to $4.6 billion, driven by a 4.8% domestic same-store sales growth and 3.7% international same-store sales growth on a constant currency basis. The company's gross margin was 51%, down 203 basis points versus last year, due to the LIFO charge.

Publication Date: Dec -20

📋 Highlights
  • EPS Adjusted Growth: Diluted EPS fell 4.6% to $31.04, but would have increased 8.9% excluding a $98M LIFO charge.
  • Store Expansion: Opened 53 stores (39 domestic, 14 international) and plans 65–70 global openings in 2026.
  • Commercial Segment Growth: Domestic commercial sales surged 14.5%, outpacing DIY’s 1.5% growth.
  • Gross Margin Resilience: Gross margin dipped 203 bps to 51% YoY, but improved 9 bps excluding LIFO charges.
  • Free Cash Flow & Buybacks: Free cash flow rose to $630M YoY, with $431M in Q1 stock repurchases under $1.7B remaining authorization.

Segment Performance

Domestic commercial sales grew 14.5%, while DIY sales grew 1.5%. The DIY business saw a slowdown in Q1, attributed to weather and a tough comparison to last year's hurricane and cold snap. The company does not see significant trade-down or elasticity to higher prices, with the lower-end consumer under pressure but stable, and the higher-end consumer holding up.

Store Expansion and Capital Allocation

The company opened 53 stores globally, including 39 net domestic stores and 14 international stores. For FY '26, the company expects to continue to open stores in an accelerated pace, investing nearly $1.6 billion in CapEx. The company repurchased $431 million of AutoZone stock in Q1 and has $1.7 billion remaining under its share buyback authorization.

Guidance and Outlook

AutoZone expects operating margins of 19% or higher, driven by growth in the commercial business and merch margin improvements. The company has lowered its expectation for LIFO headwinds, with a 25% reduction in the expected headwind for the next three quarters. The company is seeing benefits from its merch margin playbook, including alternate sources, new brands, and house brands.

Valuation

With a P/E Ratio of 22.92 and an EV/EBITDA of 16.31, the stock appears to be fairly valued. The company's ROE is negative due to a negative book value, but its ROIC is a healthy 27.94%. The Free Cash Flow Yield is 3.27%, indicating a decent return for shareholders.

Management's Confidence

Jamere Jackson noted that the international business showed accelerated growth, with opportunities to gain market share in all international markets, driven by a growing DIY and commercial business. He expects sales to accelerate as economic conditions improve, and the company remains excited about growth prospects, with a solid business model, and will focus on flawless execution to optimize shareholder value.

3. NewsRoom

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AlphaQuest LLC Makes New $2.84 Million Investment in AutoZone, Inc. $AZO

Jan -31

Source: defenseworld.net

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AutoZone, Inc. $AZO Shares Sold by Federated Hermes Inc.

Jan -30

Source: defenseworld.net

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AutoZone (NYSE:AZO) VP Richard Craig Smith Sells 5,910 Shares

Jan -28

Source: defenseworld.net

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These 3 Stocks Just Saw Major Insider Moves—Time to Be Bullish or Bearish?

Jan -27

Source: marketbeat.com

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AutoZone (AZO) Beats Stock Market Upswing: What Investors Need to Know

Jan -26

Source: zacks.com

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Winter Storm Fern Threatens Disruptions Across US: Here Are Businesses, Stocks Likely To Be Impacted

Jan -25

Source: feeds.benzinga.com

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AutoZone, Inc. $AZO Shares Sold by AMF Tjanstepension AB

Jan -25

Source: defenseworld.net

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Market Today: Netflix's WBD Bid, Tech Selloff, AI at Davos

Jan -20

Source: gurufocus.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.20%)

6. Segments

Auto Parts Stores

Expected Growth: 6.5%

As the demand for automotive parts and accessories continues to grow, AutoZone's extensive store network and strong supply chain will drive growth. The segment's expected growth rate is higher than the global growth hypothesis due to its dominant market position and loyal customer base.

All Other

Expected Growth: 5.8%

The growth of e-commerce and digital channels will contribute to the segment's growth. However, the expected growth rate is slightly lower than the global growth hypothesis due to the segment's relatively smaller size and higher competition in online sales.

7. Detailed Products

Auto Parts

AutoZone offers a wide range of auto parts, including batteries, brakes, belts, hoses, and more.

Oil and Fluids

AutoZone sells various types of motor oil, transmission fluid, brake fluid, and other automotive fluids.

Tools and Equipment

AutoZone offers a selection of tools and equipment, including air compressors, jump starters, and diagnostic tools.

Accessories and Appearance

AutoZone sells a variety of accessories, such as floor mats, seat covers, and car care products.

Chemicals and Supplies

AutoZone offers a range of chemicals and supplies, including cleaning products, adhesives, and lubricants.

Diagnostics and Testing

AutoZone provides diagnostic tools and testing equipment, including code readers and multimeters.

8. AutoZone, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

AutoZone, Inc. has a low threat of substitutes due to the lack of alternative products or services that can replace its auto parts and accessories. The company's wide range of products and strong brand recognition make it difficult for substitutes to emerge.

Bargaining Power Of Customers

AutoZone, Inc. faces moderate bargaining power from its customers. While customers have some power to negotiate prices, the company's strong brand and wide range of products limit their bargaining power.

Bargaining Power Of Suppliers

AutoZone, Inc. has a low bargaining power of suppliers due to its large scale of operations and strong relationships with suppliers. The company's ability to negotiate prices and terms with suppliers is high.

Threat Of New Entrants

AutoZone, Inc. has a low threat of new entrants due to the high barriers to entry in the auto parts and accessories market. The company's strong brand recognition, large scale of operations, and established distribution network make it difficult for new entrants to compete.

Intensity Of Rivalry

AutoZone, Inc. operates in a highly competitive market with several established players. The company faces intense rivalry from competitors such as O'Reilly Auto Parts, Advance Auto Parts, and others, which drives prices down and increases marketing expenses.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 166.11%
Debt Cost 3.95%
Equity Weight -66.11%
Equity Cost 7.54%
WACC 1.57%
Leverage -251.27%

11. Quality Control: AutoZone, Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Build-A-Bear Workshop

A-Score: 6.0/10

Value: 5.5

Growth: 6.7

Quality: 7.2

Yield: 5.0

Momentum: 8.5

Volatility: 3.0

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AutoZone

A-Score: 5.9/10

Value: 4.4

Growth: 7.2

Quality: 5.9

Yield: 0.0

Momentum: 8.5

Volatility: 9.3

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eBay

A-Score: 5.9/10

Value: 3.3

Growth: 6.1

Quality: 7.0

Yield: 4.0

Momentum: 8.5

Volatility: 6.3

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O'Reilly Automotive

A-Score: 5.9/10

Value: 3.2

Growth: 7.4

Quality: 6.0

Yield: 0.0

Momentum: 8.5

Volatility: 10.0

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Tractor Supply

A-Score: 5.2/10

Value: 2.6

Growth: 7.3

Quality: 5.4

Yield: 3.0

Momentum: 4.5

Volatility: 8.7

1-Year Total Return ->

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Amazon

A-Score: 5.2/10

Value: 1.9

Growth: 8.8

Quality: 6.8

Yield: 0.0

Momentum: 7.0

Volatility: 7.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

3722.41$

Current Price

3722.41$

Potential

0.00%

Expected Cash-Flows