AutoZone
AZO
$2876.75
-0.16%
AutoZone, Inc. is the largest U.S.-based retailer of aftermarket automotive parts and accessories, operating over 7,600 stores and generating roughly $18.9 billion in fiscal 2025 sales, with a growing presence in Mexico and Brazil. The company serves two core customer segments: do-it-yourself (DIY) enthusiasts, who account for about 69% of domestic sales, and commercial do-it-for-me (DIFM) customers, representing the remaining 31%. Currently, the stock is under pressure due to a sharp decline in May 2026 following disappointing earnings and slowing same-store sales growth, compounded by competitive concerns after reports that O'Reilly Automotive may acquire Genuine Parts' Napa distribution business. Investors are debating whether the recent pullback represents a value opportunity or signals fundamental deterioration in the face of intensifying competition and macroeconomic headwinds.…
AZO
AutoZone
$2876.75
Related headlines
Investment Opinion: Should I buy AZO Today?
Based on the analysis, AutoZone is rated as a Hold. The stock is currently trading at $2,983.29, which is 24.3% below the average analyst target of $3,941.83, offering potential upside. However, the recent earnings miss and competitive threats warrant caution. The forward PE of 17.0x is attractive relative to the trailing PE of 28.2x, but the negative PEG ratio and slowing same-store sales growth temper enthusiasm.
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AZO 12-Month Price Forecast
The AI assessment is neutral with medium confidence. AutoZone's fundamentals are solid, but the stock is in a downtrend due to competitive and macro concerns. The forward PE suggests value, but the negative PEG and slowing growth indicate risks. If the company can deliver strong earnings and same-store sales reaccelerate, the stock could rally; otherwise, it may continue to underperform. Key factors to watch are the O'Reilly-Napa deal outcome and Q4 earnings.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on AutoZone's 12-month outlook, with a consensus price target around $3913.57 and implied upside of +36.0% versus the current price.
Average Target
$3913.57
0 analysts
Implied Upside
+36.0%
vs. current price
Analyst Count
—
covering this stock
Price Range
$3200 - $4800
Analyst target range
The target price range spans from a low of $3,200 to a high of $4,800, representing a wide spread of 50% from low to high, which signals elevated uncertainty about the company's future performance. The low target of $3,200 implies a modest 7.3% upside, likely pricing in continued competitive pressures and slower growth, while the high target of $4,800 suggests a potential 60.9% upside, assuming a successful turnaround and market share gains. The recent institutional ratings show no downgrades, with all actions being reaffirmations of existing Buy or Overweight ratings, indicating that analysts are maintaining their positive outlook despite the recent earnings miss and competitive threats, which could suggest they view the pullback as an overreaction.
Bulls vs Bears: AZO Investment Factors
AutoZone presents a mixed picture: strong fundamentals such as steady revenue growth, high gross margins, and a low beta are offset by a declining stock price, slowing same-store sales, and competitive threats. The bearish case currently has stronger evidence given the stock's 29.5% decline and the recent earnings miss, but the low forward PE and analyst consensus suggest potential value. The most important tension is whether the recent slowdown is a temporary blip or a sign of structural decline, as this will determine if the stock is a bargain or a value trap.
Bullish
- Forward PE at 17x with 28.2x trailing: The forward PE of 17.0x is significantly lower than the trailing PE of 28.2x, implying the market expects substantial earnings growth. This gap suggests that the current valuation may be pricing in a recovery from the recent earnings dip, offering potential upside if the company meets these growth expectations.
- Revenue growth steady at 8.4% YoY: In Q3 FY2026, AutoZone reported revenue of $4.84 billion, up 8.4% year-over-year, consistent with the prior two quarters' growth of 8.2%. This stable growth, driven by core auto parts and international expansion, indicates the company is still expanding despite competitive pressures.
- Strong gross margin of 52.6%: AutoZone's gross margin stands at 52.6%, reflecting its pricing power and efficient supply chain. This high margin provides a buffer against cost inflation and competitive discounting, supporting profitability even if revenue growth slows.
- Analyst consensus: Strong Buy with 32% upside: With 23 analysts, the consensus recommendation is Strong Buy, and the average target price of $3,941.83 implies a 32.1% upside from the current price of $2,983.29. The low target of $3,200 still offers 7.3% upside, indicating analysts see limited downside risk.
Bearish
- Stock down 29.5% over past year: AutoZone's stock has fallen 29.5% over the past year, underperforming the S&P 500, which gained 18.65% over the same period. This significant underperformance reflects persistent selling pressure and deteriorating investor sentiment.
- Same-store sales growth slowing: Recent earnings reports highlight slowing same-store sales growth, a key metric for retailers. This deceleration suggests that the company's core DIY segment may be maturing, raising concerns about the sustainability of its growth trajectory.
- Competitive threat from O'Reilly-Napa deal: Reports that O'Reilly Automotive may acquire Genuine Parts' Napa distribution business have raised fears of intensified competition. Such a deal could strengthen O'Reilly's commercial segment, potentially pressuring AutoZone's market share and margins.
- Negative PEG ratio of -8.6: The PEG ratio of -8.6 is negative due to negative earnings growth expectations, indicating that the current valuation is not aligned with growth prospects. This suggests the stock may be overvalued relative to its expected earnings trajectory.
AZO Technical Analysis
AutoZone's stock is in a pronounced downtrend, having lost 29.5% over the past year, with the current price of $2,983.29 sitting just 3.4% above its 52-week low of $2,902.20 and 32.0% below its 52-week high of $4,388.11. The stock is trading at the bottom of its 52-week range, indicating persistent selling pressure and a lack of buyer conviction, which often suggests either a value opportunity or a falling knife depending on fundamental catalysts. The 6-month price change of -18.1% and the YTD decline of -9.7% underscore the severity of the downtrend, with the stock consistently making lower lows and lower highs since March 2026.
Beta
0.34
0.34x market volatility
Max Drawdown
-33.9%
Largest decline past year
52-Week Range
$2865-$4363
Price range past year
Annual Return
-33.9%
Cumulative gain past year
| Period | AZO Return | S&P 500 |
|---|---|---|
| 1m | -5.6% | -1.1% |
| 3m | -7.7% | +3.0% |
| 6m | -19.3% | +15.4% |
| 1y | -33.9% | +16.2% |
| ytd | -12.9% | +12.1% |
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AZO Fundamental Analysis
AutoZone's revenue growth remains positive but has decelerated, with the most recent quarter (Q3 FY2026, ended May 9, 2026) showing revenue of $4.84 billion, up 8.4% year-over-year, compared to prior quarters where growth was more robust. The company's revenue trajectory has been uneven, with Q2 FY2026 revenue of $4.27 billion (up 8.2% YoY) and Q1 FY2026 revenue of $4.63 billion (up 8.2% YoY), indicating a stable but moderating growth rate. The growth is driven primarily by its core auto parts locations, as the company does not break out segment data beyond this, but international expansion and commercial sales are cited as key growth drivers, though same-store sales growth has slowed, raising concerns about the sustainability of the growth trajectory.
Quarterly Revenue
$4.8B
2026-05
Revenue YoY Growth
+8.4%
YoY Comparison
Gross Margin
52.1%
Latest Quarter
Free Cash Flow
$1.6B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is AZO Overvalued?
Given that AutoZone has positive net income, the PE ratio is the most appropriate valuation metric. The trailing PE is 28.2x, while the forward PE is 17.0x, implying the market expects significant earnings growth, which is consistent with the estimated EPS growth from analysts (estimated EPS of $268.49 for the next fiscal year). The gap between trailing and forward PE suggests the market is pricing in a recovery from the recent earnings dip, but the negative PEG ratio of -8.6 indicates that growth expectations are not fully aligned with the current valuation, warranting caution.
PE
28.2x
Latest Quarter
vs. Historical
High-End
5-Year PE Range 11x~31x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
19.5x
Enterprise Value Multiple
Investment Risk Disclosure
Financial risks include AutoZone's high leverage, with a debt-to-equity ratio of -3.6, indicating negative book value due to aggressive share buybacks. This leverage amplifies the impact of earnings fluctuations on shareholder equity. Additionally, the company's net margin of 13.2% and operating margin of 19.1% are healthy, but any margin compression from competitive pricing or cost inflation could hurt profitability. The negative PEG ratio of -8.6 signals that earnings growth expectations are not supportive of the current valuation, posing a risk if growth fails to materialize as expected.
FAQ
The key risks include: 1) Competitive risk from O'Reilly's potential acquisition of Napa, which could intensify competition and pressure market share. 2) Financial risk from high leverage, with a debt-to-equity ratio of -3.6, which could amplify losses if earnings decline. 3) Macro risk from economic downturns that reduce consumer spending on auto parts, though the low beta of 0.34 provides some cushion. 4) Company-specific risk of slowing same-store sales growth, which has been a concern in recent quarters. The most severe risk is a combination of competitive disruption and economic weakness, which could lead to a decline toward the 52-week low of $2,902.20.
The 12-month forecast is mixed. In the bull case (25% probability), the stock could reach $3,941-$4,800, driven by strong earnings and market share gains. In the base case (50% probability), the stock is expected to trade between $3,200 and $3,941, reflecting steady growth but no major catalysts. In the bear case (25% probability), the stock could fall to $2,902-$3,200 if competitive pressures intensify and same-store sales decline. The most likely scenario is the base case, with the stock trading around the average analyst target of $3,941.83, assuming the company maintains its growth trajectory.
AutoZone's valuation is mixed. The trailing PE of 28.2x is above the market average, but the forward PE of 17.0x is lower, indicating expected earnings growth. The PEG ratio is negative at -8.6, which typically signals overvaluation if growth is negative, but here it reflects a temporary earnings dip. Compared to its own history, the stock is trading near its 52-week low, suggesting it may be undervalued. However, the negative relative strength versus the S&P 500 indicates that the market is pricing in significant risks. Overall, the stock appears fairly valued to slightly undervalued, but the negative PEG warrants caution.
AutoZone is a good buy for long-term investors seeking a defensive play in the automotive aftermarket, given its steady revenue growth of 8.4% YoY and high gross margin of 52.6%. However, the stock has fallen 29.5% over the past year, and the recent earnings miss and competitive threats from O'Reilly's potential Napa acquisition introduce uncertainty. The average analyst target of $3,941.83 implies a 32.1% upside, but the low target of $3,200 suggests limited downside. For risk-averse investors, waiting for confirmation of same-store sales stabilization might be prudent, while value investors could consider the current price attractive given the forward PE of 17.0x.
AutoZone is more suitable for long-term investment due to its defensive characteristics, such as a low beta of 0.34 and steady revenue growth. The stock is currently in a downtrend, making short-term trading risky, as evidenced by its 29.5% decline over the past year. For long-term investors, the forward PE of 17.0x and analyst consensus Strong Buy suggest potential for recovery over a 3-5 year horizon. However, the negative PEG ratio and competitive threats mean that investors should be prepared for volatility. A minimum holding period of 3 years is recommended to allow the company to navigate the current challenges and benefit from its international expansion.