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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 Q4 Earnings: Strong Sales Growth and Strategic Expansion

AutoZone reported Q4 earnings of $837 million, a 0.5% decrease year-over-year, driven by a $4.14 per share decrease due to LIFO and unfavorable FX. EPS for the quarter was $48.71, a 1.3% increase year-over-year, slightly missing analyst estimates of $50.73. Total sales grew 0.6% to $6.2 billion, driven by a 4.8% increase in domestic same-store sales and a 7.2% rise in international same-store sales on a constant currency basis. Excluding a non-cash $80 million LIFO charge, earnings per share would have increased by 8.7% year-over-year.

Publication Date: Sep -26

📋 Highlights
  • Total Sales Growth:: Fiscal Q4 sales rose 0.6% to $6.2 billion, driven by 4.8% domestic and 7.2% international same-store sales increases (constant currency).
  • Earnings Impact:: Excluding $80M LIFO charge, EPS would have grown 8.7% year-over-year, with FY25 EPS at $144.87, down 3.1% due to LIFO and FX headwinds.
  • Commercial Sales Surge:: Domestic commercial sales climbed 12.5% on a 16-week basis, fueled by expanded services and inventory improvements.
  • International Expansion:: International same-store sales rose 7.2% (constant currency), led by Mexico and Brazil, with 43% store count growth and $5.2 billion in commercial sales.
  • Store and Capex Growth:: Opened 304 net new stores in FY25, with $1.4 billion in FY26 capex planned for store growth and supply chain upgrades, targeting 500 stores by 2028.

Segment Performance

Domestic commercial sales surged 12.5% on a 16-week basis, fueled by the expansion of service offerings and improved inventory availability. Domestic DIY sales grew 2.2%, with ticket growth outpacing transaction count decline. International same-store sales rose 7.2% on a constant currency basis, with Mexico and Brazil leading the way, as AutoZone continues to expand its global footprint.

Store Expansion and Capital Expenditures

The company opened a record 304 net new stores during the year, with a focus on expanding mega hub stores to enhance customer service and product availability. AutoZone plans to invest $1.4 billion in capital expenditures in fiscal 2026, with a focus on store growth and supply chain upgrades. The company expects to continue generating strong cash flow and return significant amounts to shareholders through share repurchases.

Valuation and Growth Prospects

With a P/E Ratio of 28.11 and an EV/EBITDA of 19.38, AutoZone's valuation suggests that the market is pricing in moderate growth expectations. The company's ROIC of 29.26% indicates strong operational efficiency. AutoZone anticipates continued growth in both DIY and commercial segments, driven by continued market share gains and investments in technology and customer service. Analysts estimate next year's revenue growth at 6.7%, which is in line with the company's strategic expansion plans.

International Growth and Mexico Expansion

AutoZone is optimistic about its future growth prospects, driven by a resilient DIY business, a fast-growing international business, and a domestic commercial business gaining market share. The company's Mexico business is performing well, and it plans to expand its "mega hub" strategy in the region, driven by the significant commercial opportunity in the market. AutoZone expects mid-single-digit growth in SG&A per store for fiscal 2026, with acceleration in the second half due to increased store openings.

3. NewsRoom

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Seeking Clues to AutoZone (AZO) Q1 Earnings? A Peek Into Wall Street Projections for Key Metrics

Dec -04

Source: zacks.com

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Here Are Thursday’s Top Wall Street Analyst Research Calls: AutoZone, BXP, Fiserv, Meta Platforms, PayPal, Salesforce, Toast and More

Dec -04

Source:

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AutoZone: LIFO Drags The Quarter; Commercial Drives The Story (Earnings Preview)

Dec -04

Source: seekingalpha.com

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AutoZone Set For Solid Quarter As Consumer Demand Rebounds: Analyst

Dec -03

Source: benzinga.com

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AutoZone (AZO) Stock Slides as Market Rises: Facts to Know Before You Trade

Dec -02

Source:

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AutoZone (AZO) Expected to Beat Earnings Estimates: What to Know Ahead of Q1 Release

Dec -02

Source: zacks.com

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Boston Family Office LLC Sells 27 Shares of AutoZone, Inc. $AZO

Dec -02

Source: defenseworld.net

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Brandes Investment Partners LP Trims Holdings in AutoZone, Inc. $AZO

Dec -02

Source: defenseworld.net

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: 6.1/10

Value: 5.1

Growth: 6.9

Quality: 7.0

Yield: 5.0

Momentum: 10.0

Volatility: 2.7

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AutoZone

A-Score: 5.9/10

Value: 3.7

Growth: 7.2

Quality: 6.1

Yield: 0.0

Momentum: 9.0

Volatility: 9.7

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O'Reilly Automotive

A-Score: 5.8/10

Value: 2.9

Growth: 7.4

Quality: 6.0

Yield: 0.0

Momentum: 8.5

Volatility: 10.0

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eBay

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Value: 3.3

Growth: 6.1

Quality: 6.9

Yield: 3.0

Momentum: 8.0

Volatility: 5.7

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Amazon

A-Score: 5.3/10

Value: 1.8

Growth: 8.8

Quality: 6.9

Yield: 0.0

Momentum: 7.0

Volatility: 7.0

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A-Score: 5.0/10

Value: 2.4

Growth: 7.3

Quality: 5.4

Yield: 3.0

Momentum: 3.5

Volatility: 8.7

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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

3840.5$

Current Price

3840.5$

Potential

0.00%

Expected Cash-Flows