Autozone Inc (AZO) Stock Analysis and Metrics

Autozone

NYSE: AZO

$3,078.88 ▲ +6.24 (+0.20%)

At close: Jul 13, 2026 · 3:59 PM UTC

Financial Ratios

Market Cap53.07 Bn

P/E28.80

P/S2.66

Div. Yield0.00

ROIC (Qtr)0.00

Total Debt (Qtr)9.02 Bn

Revenue Growth (1y) (Qtr)8.44

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About

AutoZone, Inc. is a leading retailer and distributor of automotive replacement parts and accessories in the Americas. The company operates stores across the United States, Mexico, and Brazil, offering a wide range of products for cars, sport utility vehicles, vans, and light duty trucks. AutoZone's core business centers on selling new and remanufactured automotive hard parts, maintenance items, accessories, and non-automotive products through its physical retail locations and online platforms.

AutoZone generates revenue primarily through the sale of automotive parts and accessories in its retail stores and via its e-commerce websites, including www.autozone.com and www.autozonepro.com. The company also derives revenue from the sale of ALLDATA automotive diagnostic, repair, collision, and shop management software through www.alldata.com. Additionally, AutoZone provides product information for its Duralast branded products through www.duralastparts.com. The company does not generate revenue from automotive repair or installation services.

The company operates through the following segments:

• Retail. This segment encompasses the sale of automotive hard parts, maintenance items, accessories, and non-automotive products through AutoZone's network of retail stores in the United States, Mexico, and Brazil. It includes both do-it-yourself and commercial sales channels, with stores offering in-person purchases and services such as the Loan-A-Tool program and free diagnostic checks via the AutoZone Fix Finder service.

• Commercial. This segment focuses on serving professional repair businesses through dedicated sales teams, prompt delivery options, and commercial credit programs. Commercial customers can purchase products online via www.autozonepro.com or through the AutoZone Pro mobile application, with enhanced product assortments available through hub and mega hub stores.

• ALLDATA. This segment involves the development and sale of the ALLDATA brand of automotive diagnostic, repair, collision, and shop management software, accessible via www.alldata.com. The software supports professional technicians in vehicle repair and shop management operations.

AutoZone holds a leading position in the highly competitive automotive aftermarket parts industry in the Americas. The company competes with national and regional auto parts chains, independent retailers, online marketplaces, wholesale distributors, and various other retailers that sell vehicle parts and supplies. AutoZone differentiates itself through its emphasis on customer service, including the expertise of its employees known as AutoZoners, prompt delivery capabilities for commercial clients, extensive product selection and availability, strong in-house brands such as Duralast and its family of brands, and the convenience of its store locations and layouts.

AutoZone serves a diverse customer base that includes do-it-yourself consumers, local and regional repair garages, national repair chains, dealerships, service stations, fleet owners, and other commercial accounts. The company's commercial sales program specifically targets repair garages, dealers, service stations, fleet operators, and similar businesses across the United States, Mexico, and Brazil.

Investment Thesis

▲ Bull case

AutoZone's domestic commercial business is experiencing robust double-digit growth at 10.4% in Q3 FY26, driven by significant share gains in both national accounts and up-and-down-the-street segments, with management explicitly stating they are significantly underpenetrated in commercial and gaining share, and this segment represents a major untapped opportunity as the company continues to double down on hub and mega hub initiatives, with 156 mega hubs currently operating and plans to reach 300 at full build-out, which are performing better than original pro forma expectations due to improved inventory availability, faster time-to-serve, and stronger customer demand from an aging vehicle park and parts proliferation, creating a sustainable competitive advantage that management believes will drive accelerated share gains and margin expansion over time as commercial mix increases and operational efficiencies from the hub strategy scale.
The company's new store performance is exceeding historical averages and original pro forma forecasts across both DIY and commercial segments, with stores indexing higher than initially modeled due to successful execution of productivity initiatives, supply chain improvements, and the halo effect from mega hubs, which provide expanded assortment and serve as inventory sources for satellite stores, and this outperformance is compounded by an accelerating store opening pace of 365 stores globally for FY26 versus 305 in FY25, with management emphasizing that the combination of new store growth above historical averages and better-than-expected per-store returns sets up a compelling comp waterfall effect that will drive sustainable same-store sales growth in the 4%+ range and support higher returns on invested capital as the business laps tough comparisons and benefits from lapping inflation while maintaining share gains.
AutoZone is positioned to capitalize on structural tailwinds from a growing and aging vehicle fleet, challenging new and used car sales markets, and resilient DIY demand driven by maintenance and failure behavior, which management describes as pretty inelastic due to the break-fix nature of the business, where consumers can defer maintenance but face higher failure costs, creating a natural floor for demand that remains intact despite near-term weather-related softness in heat-sensitive categories, and with the company expecting a normal to hotter-than-normal summer based on weather prognostication, the temporary Q3 comp slowdown from unseasonably cool weather is viewed as a transient headwind that will reverse as seasonal demand for air conditioning, starting, and charging categories rebounds, providing a clear path to reaccelerating DIY transaction growth and traffic improvement in Q4 FY26 as inflation laps and the deferral cycle from prior price increases begins to unwind.
Despite near-term margin pressure from a $20 million LIFO charge and commercial mix shift, AutoZone's core gross margin improved by 20 basis points year-over-year excluding LIFO, driven by merchandise margin expansion, improving shrink, and supply chain productivity gains, with management noting they have offset commercial mix drag through core operational efficiencies and expect to continue managing SG&A in line with sales growth through disciplined expense control and productivity initiatives, and with free cash flow generation strong at $455 million in Q3 FY26 and $1.1 billion year-to-date, the company retains significant flexibility to fund its $1.6 billion annual CapEx plan for accelerated store growth and mega hub expansion while returning excess cash via share repurchases, having bought back over 100% of then-outstanding shares since the program's inception in 2000, reinforcing a capital allocation strategy focused on long-term shareholder value creation through disciplined investment and buybacks.

AutoZone's domestic commercial business is experiencing robust double-digit growth at 10.4% in Q3 FY26, driven by significant share gains in both national accounts and up-and-down-the-street segments, with management explicitly stating they are significantly underpenetrated in commercial and gaining share, and this segment represents a major untapped opportunity as the company continues to double down on hub and mega hub initiatives, with 156 mega hubs currently operating and plans to reach 300 at full build-out, which are performing better than original pro forma expectations due to improved inventory availability, faster time-to-serve, and stronger customer demand from an aging vehicle park and parts proliferation, creating a sustainable competitive advantage that management believes will drive accelerated share gains and margin expansion over time as commercial mix increases and operational efficiencies from the hub strategy scale.
The company's new store performance is exceeding historical averages and original pro forma forecasts across both DIY and commercial segments, with stores indexing higher than initially modeled due to successful execution of productivity initiatives, supply chain improvements, and the halo effect from mega hubs, which provide expanded assortment and serve as inventory sources for satellite stores, and this outperformance is compounded by an accelerating store opening pace of 365 stores globally for FY26 versus 305 in FY25, with management emphasizing that the combination of new store growth above historical averages and better-than-expected per-store returns sets up a compelling comp waterfall effect that will drive sustainable same-store sales growth in the 4%+ range and support higher returns on invested capital as the business laps tough comparisons and benefits from lapping inflation while maintaining share gains.
AutoZone is positioned to capitalize on structural tailwinds from a growing and aging vehicle fleet, challenging new and used car sales markets, and resilient DIY demand driven by maintenance and failure behavior, which management describes as pretty inelastic due to the break-fix nature of the business, where consumers can defer maintenance but face higher failure costs, creating a natural floor for demand that remains intact despite near-term weather-related softness in heat-sensitive categories, and with the company expecting a normal to hotter-than-normal summer based on weather prognostication, the temporary Q3 comp slowdown from unseasonably cool weather is viewed as a transient headwind that will reverse as seasonal demand for air conditioning, starting, and charging categories rebounds, providing a clear path to reaccelerating DIY transaction growth and traffic improvement in Q4 FY26 as inflation laps and the deferral cycle from prior price increases begins to unwind.
Despite near-term margin pressure from a $20 million LIFO charge and commercial mix shift, AutoZone's core gross margin improved by 20 basis points year-over-year excluding LIFO, driven by merchandise margin expansion, improving shrink, and supply chain productivity gains, with management noting they have offset commercial mix drag through core operational efficiencies and expect to continue managing SG&A in line with sales growth through disciplined expense control and productivity initiatives, and with free cash flow generation strong at $455 million in Q3 FY26 and $1.1 billion year-to-date, the company retains significant flexibility to fund its $1.6 billion annual CapEx plan for accelerated store growth and mega hub expansion while returning excess cash via share repurchases, having bought back over 100% of then-outstanding shares since the program's inception in 2000, reinforcing a capital allocation strategy focused on long-term shareholder value creation through disciplined investment and buybacks.

▼ Bear case

AutoZone's international segment continues to underperform with only 1.6% constant currency same-store sales growth in Q3 FY26, reflecting a persistently soft macroeconomic environment in Mexico and Brazil that management acknowledges is unlikely to improve in the near term, with Q4 expectations set to mirror Q3's subdued performance, and despite expressing confidence in long-term returns on capital, the company derives minimal immediate contribution from international operations, which now represent approximately 14% of total store base but remain a drag on overall growth momentum, and while they cite share gains in these markets, the lack of meaningful sales acceleration raises concerns about the scalability and profitability of international expansion, especially as competitors may be gaining ground in these regions during AutoZone's cautious investment approach.
The company's gross margin faced headwinds from a $20 million LIFO charge in Q3 FY26, which reduced EBIT by $20 million and gross margin by 77 basis points, with management planning a $30 million LIFO charge for Q4 FY26, signaling ongoing inflationary pressure in inventory costs that will continue to pressure profitability, and while core gross margin excluding LIFO improved 20 basis points, this was achieved only by offsetting a 22-basis-point commercial mix drag, indicating that the shift toward lower-margin commercial business is actively eroding profitability, and with commercial representing 34% of domestic auto parts sales and growing faster than DIY, the structural mix shift toward commercial poses a persistent challenge to maintaining historical gross margin levels, especially as national account business—while valued—is described as highly competitive with pricing pressure, limiting AutoZone's ability to offset mix-related margin deterioration through price increases alone.
Despite management's confidence in overcoming inflationary headwinds, the company acknowledges ongoing cost pressures from steel tariffs, energy-related resin increases, and potential lubricant supply constraints, with executives noting that tariffs on steel and automotive parts have been in place for some time and are still cycling through inventory, and while they believe the impact will be slightly muted due to lapping prior-year inflation, the persistence of these input cost pressures suggests that margin expansion will remain difficult, and with interest expense expected to rise to $152 million in Q4 FY26 from $148 million last year and SG&A per store up 3% year-over-year, the company faces rising operating costs that may not be fully offset by productivity gains, particularly if DIY transaction counts remain depressed beyond the anticipated weather-related rebound, as evidenced by the mid-3% range traffic declines in Q2 and Q3 FY26 that management attributed partly to cooler weather but could also reflect deeper consumer sensitivity to inflation in discretionary categories.
AutoZone's aggressive capital allocation strategy, while supporting growth, carries execution risk, with the company investing nearly $1.6 billion in CapEx for FY26 and planning a similar amount for FY27, primarily in accelerated store growth and mega hubs, and while new stores are outperforming pro forma expectations, the pace of opening 365 stores globally in FY26 represents a significant increase from the 305 opened in FY25, raising concerns about potential over-expansion if demand normalizes or if the commercial business fails to scale as anticipated, and with the company already having opened 156 mega hubs and targeting 300 at full build-out, the risk of diminishing returns increases as saturation nears in key markets, and the reliance on share gains and comp waterfall from new stores to drive growth assumes continued market share expansion in a competitive landscape where peers are also investing in similar hub-and-spoke models, potentially limiting AutoZone's ability to sustain its current growth trajectory without disproportionate increases in spending or margin compression.

AutoZone's international segment continues to underperform with only 1.6% constant currency same-store sales growth in Q3 FY26, reflecting a persistently soft macroeconomic environment in Mexico and Brazil that management acknowledges is unlikely to improve in the near term, with Q4 expectations set to mirror Q3's subdued performance, and despite expressing confidence in long-term returns on capital, the company derives minimal immediate contribution from international operations, which now represent approximately 14% of total store base but remain a drag on overall growth momentum, and while they cite share gains in these markets, the lack of meaningful sales acceleration raises concerns about the scalability and profitability of international expansion, especially as competitors may be gaining ground in these regions during AutoZone's cautious investment approach.
The company's gross margin faced headwinds from a $20 million LIFO charge in Q3 FY26, which reduced EBIT by $20 million and gross margin by 77 basis points, with management planning a $30 million LIFO charge for Q4 FY26, signaling ongoing inflationary pressure in inventory costs that will continue to pressure profitability, and while core gross margin excluding LIFO improved 20 basis points, this was achieved only by offsetting a 22-basis-point commercial mix drag, indicating that the shift toward lower-margin commercial business is actively eroding profitability, and with commercial representing 34% of domestic auto parts sales and growing faster than DIY, the structural mix shift toward commercial poses a persistent challenge to maintaining historical gross margin levels, especially as national account business—while valued—is described as highly competitive with pricing pressure, limiting AutoZone's ability to offset mix-related margin deterioration through price increases alone.
Despite management's confidence in overcoming inflationary headwinds, the company acknowledges ongoing cost pressures from steel tariffs, energy-related resin increases, and potential lubricant supply constraints, with executives noting that tariffs on steel and automotive parts have been in place for some time and are still cycling through inventory, and while they believe the impact will be slightly muted due to lapping prior-year inflation, the persistence of these input cost pressures suggests that margin expansion will remain difficult, and with interest expense expected to rise to $152 million in Q4 FY26 from $148 million last year and SG&A per store up 3% year-over-year, the company faces rising operating costs that may not be fully offset by productivity gains, particularly if DIY transaction counts remain depressed beyond the anticipated weather-related rebound, as evidenced by the mid-3% range traffic declines in Q2 and Q3 FY26 that management attributed partly to cooler weather but could also reflect deeper consumer sensitivity to inflation in discretionary categories.
AutoZone's aggressive capital allocation strategy, while supporting growth, carries execution risk, with the company investing nearly $1.6 billion in CapEx for FY26 and planning a similar amount for FY27, primarily in accelerated store growth and mega hubs, and while new stores are outperforming pro forma expectations, the pace of opening 365 stores globally in FY26 represents a significant increase from the 305 opened in FY25, raising concerns about potential over-expansion if demand normalizes or if the commercial business fails to scale as anticipated, and with the company already having opened 156 mega hubs and targeting 300 at full build-out, the risk of diminishing returns increases as saturation nears in key markets, and the reliance on share gains and comp waterfall from new stores to drive growth assumes continued market share expansion in a competitive landscape where peers are also investing in similar hub-and-spoke models, potentially limiting AutoZone's ability to sustain its current growth trajectory without disproportionate increases in spending or margin compression.

Segments Breakdown of Revenue (2025)

Peer Comparison

Companies in the Auto Parts

S.No.	Ticker	Company	Market Cap	P/E	P/S	Total Debt (Qtr)
1	AAP	Advance Auto Parts Inc	65.13 Bn	-2,713.78	7.57	3.41 Bn
2	AZO	Autozone Inc	53.07 Bn	28.80	2.66	9.02 Bn
3	MGA	Magna International Inc	17.54 Bn	44.62	0.56	4.66 Bn
4	GPC	Genuine Parts Co	16.15 Bn	268.82	0.65	4.64 Bn
5	AUR	Aurora Innovation, Inc.	13.77 Bn	-16.57	3,443.09	-
6	BWA	Borgwarner Inc	13.21 Bn	51.79	0.92	3.88 Bn
7	APTV	Aptiv PLC	12.84 Bn	-40.37	0.62	9.35 Bn
8	ALV	Autoliv Inc	8.73 Bn	-72.12	0.79	2.09 Bn

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Investment Thesis

Segments Breakdown of Revenue (2025)

Segments Breakdown of Revenue (2025)

Peer Comparison

Research Tools

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Investment Thesis

Segments Breakdown of Revenue (2025)

Segments Breakdown of Revenue (2025)

Peer Comparison

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