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What this page is: Delvantic's full research page for AutoZone Inc. (AZO) — AI-driven forensic equity research: mechanical valuation models (DCF, EPV, anchored-PE, scenario) plus three independent AI lenses (Quality / Value / Sentiment). Everything below is rendered server-side; you are not missing content that requires JavaScript. All scores are predictions and research opinions, not financial advice.
Our current read (analysis of 2026-10-07): Designation Low · Gem Score -17 (−100…+100 Quality+Value blend) · Quality 53 · Value -63 · Sentiment 17 (timing only, not weighted) · Composite fair value $2,542.99 vs $3,025.00 at analysis
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AutoZone Inc.
AZO NYSEAutoZone Inc. is a specialty retailer and distributor of automotive replacement parts and accessories serving both consumer and commercial markets. The company focuses on the aftermarket segment, providing parts for maintenance, repair, and enhancement of a wide range of vehicle makes and models. AutoZone operates under an auto parts stores format complemented by distribution capabilities that support product availability and inventory breadth across its network. Its stores primarily target do-it-yourself customers while also supplying professional repair shops and garages through commercial programs. Core offerings include hard parts such as batteries, brakes, and engine components, as well as maintenance items, tools, and car care products. AutoZone emphasizes convenient locations, in-store product expertise, and related support services like diagnostic assistance to help customers identify and source the correct parts. Founded in 1979 and headquartered in Memphis, Tennessee, AutoZone plays a significant role in the North American automotive aftermarket by helping keep passenger and light trucks in operation beyond their original warranty periods.
Price Overview
Price History (1 Year)
Revenue & Net Income Trend
| Period | Revenue | Net Income | Net Margin | YoY/QoQ |
|---|
Key Metrics
EPS (Diluted): 144.87
Total Equity: -$3.41B
Shares: 17,245,000
Total Debt: $8.80B
Cash: $271.80M
EBITDA: $4.22B
Total Debt: $8.80B
Cash: $271.80M
Revenue: $18.94B
Revenue: $18.94B
Revenue: $18.94B
Total Equity: -$3.41B
Tax Rate: 20.3%
Equity: -$3.41B
Total Debt: $8.80B
Cash: $271.80M
Current Liabilities: $9.52B
Long-Term Debt: $8.80B
Total Debt: $8.80B
Total Equity: -$3.41B
Shares: 17,245,000
Shares: 17,245,000
CapEx: -$1.33B
Shares: 17,245,000
Stock Price: $3,025
Net Income: $2.50B
Industry Benchmarks
Income Statement (Annual)
Last updated: Aug 17, 2026 12:41am (51d ago)| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue | $14.6B | $16.3B | $17.5B | $18.5B | $18.9B |
| Cost of Revenue | $6.9B | $7.8B | $8.4B | $8.7B | $9.0B |
| Gross Profit | $7.7B | $8.5B | $9.1B | $9.8B | $10.0B |
| Operating Expenses | $4.8B | $5.2B | $5.6B | $6.0B | $6.4B |
| Operating Income | $2.9B | $3.3B | $3.5B | $3.8B | $3.6B |
| Net Income | $2.2B | $2.4B | $2.5B | $2.7B | $2.5B |
| EBITDA | $3.4B | $3.7B | $4.0B | $4.3B | $4.2B |
| EPS | $97.60 | $120.83 | $136.60 | $153.82 | $148.80 |
| EPS (Diluted) | $95.19 | $117.19 | $132.36 | $149.55 | $144.87 |
Balance Sheet (Annual)
Last updated: Aug 17, 2026 12:22am (51d ago)| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Cash & Equivalents | $1.2B | $264.4M | $277.1M | $298.2M | $271.8M |
| Total Current Assets | $6.4B | $6.6B | $6.8B | $7.3B | $8.3B |
| Total Assets | $14.5B | $15.3B | $16.0B | $17.2B | $19.4B |
| Current Liabilities | $7.4B | $8.6B | $8.5B | $8.7B | $9.5B |
| Long-Term Debt | $5.3B | $6.1B | $7.7B | $9.0B | $8.8B |
| Total Liabilities | $16.3B | $18.8B | $20.3B | $21.9B | $22.8B |
| Total Equity | -$1.8B | -$3.5B | -$4.3B | -$4.7B | -$3.4B |
| Retained Earnings | -$419.8M | -$1.3B | -$3.0B | -$4.4B | -$4.0B |
Cash Flow (Annual)
Last updated: Aug 17, 2026 12:41am (51d ago)| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Operating Cash Flow | $3.5B | $3.2B | $2.9B | $3.0B | $3.1B |
| Capital Expenditure | -$621.8M | -$672.4M | -$796.7M | -$1.1B | -$1.3B |
| Free Cash Flow | $2.9B | $2.5B | $2.1B | $1.9B | $1.8B |
| Acquisitions (net) | — | — | — | — | — |
| Net Debt Issued / (Repaid) | -$250.0M | $250.0M | $950.0M | $2.0B | -$400.0M |
| Dividends Paid | — | — | — | — | — |
| Stock Buybacks | -$3.4B | -$4.4B | -$3.7B | -$3.1B | -$1.6B |
| Net Change in Cash | -$579.5M | -$907.0M | $12.7M | $21.1M | -$26.4M |
Growth Trends (YoY %)
Last updated: Aug 17, 2026 12:41am (51d ago)| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue Growth | +11.1% | +7.4% | +5.9% | +2.4% |
| Gross Profit Growth | +9.8% | +7.1% | +8.2% | +1.5% |
| Operating Income Growth | +11.1% | +6.2% | +9.1% | -4.7% |
| Net Income Growth | +11.9% | +4.1% | +5.3% | -6.2% |
| EBITDA Growth | +10.8% | +7.0% | +9.2% | -2.7% |
Deep Analysis
Risk : Reward — upside vs downside from this company's own quarters
Computed 2026-10-06 02:00A +1σ run of quarters pays -22%; a −1σ run costs 44%. Ratio -0.5:1 (μ 6.1%, σ 3.3% floored by sector, 16 pairs).
Older method (repeat-worst-quarter): 0.2 : 1
| Case | Growth | Margin | Fair value | vs price ($3,025.00) |
|---|---|---|---|---|
| Bull — recovery | +10% | 17.3% | $3,241.11 | +7% |
| Base — stabilizes | +7% | 15.0% | $2,556.17 | -16% |
| Bear — keeps slipping | +3% | 12.8% | $1,975.30 | -35% |
| Stress — last quarter repeats | +1% | 11.4% | $1,627.80 | -46% |
| Upside — a +1σ run of quarters (v2) | +10% | 12.4% | $2,360.05 | -22% |
| Stress — a −1σ run of quarters (v2) | +3% | 11.0% | $1,698.46 | -44% |
Narrative Economics
market-narrative step).
Growth Outlook
Analyzed 2026-08-17 16:30The question every valuation on this page silently assumes: is this company likely to grow? Judged forward — the business, its category, the world — against what's already printed.
Claude Reading
Starting from the raw tape: AZO's FY25 (Aug-end) delivered $18.94B revenue, up 2.4% YoY, with net income of $2.50B — actually *down* from $2.66B in FY24. Operating income fell to $3.61B from $3.79B, so operating margin compressed from 20.5% to 19.1%. FCF collapsed to $1.79B from historical ~$2.5B+ levels, a -8.6% CAGR. This is not a compounder in motion; this is a business where the top line is crawling and every profit metric below revenue is going the wrong direction. Yet the stock trades at 20.9× earnings and ~28× FCF ($49.4B cap / $1.79B FCF), with negative book equity of -$3.4B against $8.8B of debt and $272M of cash. The most recent quarters confirm the deceleration: Q3 FY26 revenue of $4.84B is only ~8.5% above the prior year comp of $4.46B, but Q2 FY26 was $4.27B vs $3.95B (+8.1%) — decent optically, but NI margins have drifted from 14.5% (Aug-24) to 13.3-13.4% recently. The buyback is doing heavy lifting on EPS while the underlying engine sputters.
I largely agree with the synthesis verdict of overvalued, and specifically with the Thesis Evaluation's framing: the market is paying for 10%+ compounding while fundamentals deliver 2-5%. The gap between a $2,128 signal-adjusted fair value and $3,025 is roughly 30% air. The Market Forces "leveraged value trap" language is more alarmist than I'd go — AZO still throws off $3.1B in operating cash, covers interest comfortably, and the negative equity is a deliberate buyback artifact, not distress. But the underlying complaint — that buybacks can no longer paper over decelerating fundamentals — is directionally right. Where I'd push back on the models: the Pre-Flight note about "31% pullback from 52-week highs" doesn't match a $3,025 print that looks near cycle highs given the $49B cap; either the anchor is stale or the pullback narrative is wrong. And the Narrative layer calling this "anchored" is generous — a 42% DCF premium on a decelerating retailer is a story premium whether you dress it up as "consensus operational bet" or not.
The contrarian case I'd steelman: AZO's commercial/DIFM business is genuinely under-penetrated versus ORLY (which trades at ~30× earnings, so AZO at 21× is the "cheap" peer), the vehicle fleet is at record age (~12.6 years), and if same-store sales re-accelerate to mid-single-digits as they did in FY22-23, the FCF trough of FY25 looks like a working-capital blip rather than structural. The Q3 FY26 print of $641M NI on $4.84B revenue (13.3% margin) shows margins stabilizing, not collapsing further. Buybacks at any price have historically worked for AZO shareholders for 20 years — betting against them requires believing "this time is different," which is usually wrong. EV headwinds are real but 10+ years out; parts demand is dominated by 8-15 year-old vehicles that are 100% ICE today. If you'd bought AZO at every "overvalued" call since 2015 you'd have tripled your money.
That contrarian case is coherent but doesn't resolve the price. Even granting durable moat and eventual re-acceleration, paying 28× FCF for a business whose FCF is actively declining requires a specific catalyst — Q4 FY26 comp acceleration, commercial share gains showing up in the segment breakout, or a management guide raise. None are visible in this data. The insider activity is nil (a 300-share award and a 1-share gift — essentially no signal). Revenue confidence is flagged as decelerating, which matches my read. I'd anchor fair value around $2,300-2,500 — above the model's $2,128 because I give more weight to buyback-driven per-share compounding — but well below $3,025. This is a good business at a bad price, and the asymmetry favors patience. A 20% drawdown to ~$2,400 makes this compelling; here it's a source of funds or a short-vol underwrite, not a long.
GPT Reading
AutoZone still looks like a very good business, but the stock already prices it like a great compounder with more growth than the recent numbers support. The operating model is plainly strong: FY2025 revenue was $18.94B, up from $18.49B in FY2024 and $17.46B in FY2023, with gross margin holding at 52.6% and operating margin still a hefty 19.1%. That is elite for a retailer. But the more important detail is that growth has slowed while profit dollars have not kept pace. Net income fell from $2.66B in FY2024 to $2.50B in FY2025 even as sales rose, and operating income slipped from $3.79B to $3.61B. On the quarterly run-rate, the story is similar: the latest quarter showed revenue up from $4.46B to $4.84B year over year, but net income only moved from $608.4M to $641.5M, and the February quarter was worse, with revenue up from $3.95B to $4.27B while net income fell from $487.9M to $468.9M. That is not a broken franchise; it is a mature one encountering cost pressure and less operating leverage than the multiple implies.
The valuation is where I part company with the more complacent “steady compounder” narrative. At $3,025, the market cap is $49.4B. Against FY2025 net income of $2.50B, the stock is around 20.9x earnings. Against free cash flow of $1.79B, it is roughly 27.6x FCF, which is rich for a company whose 5-year revenue CAGR is only 4.2%, earnings CAGR is slightly negative, and latest annual FCF was down versus prior periods. Even giving credit for the business quality, 13.8x EV/EBITDA and 3.1x EV/revenue are not cheap for a retailer with low-single-digit sales growth and modest pressure on margins. The negative equity does not bother me in itself because it is largely the artifact of aggressive buybacks, but it does matter that this financial engineering no longer cleanly rides atop growing profit. With $8.8B of debt and only $271.8M of cash, the model still works because operating cash flow is $3.12B, yet the room for buyback-driven EPS magic is narrower if FCF remains around $1.8B rather than reaccelerating.
What stands out most is that the bearish “value trap” language overstates the problem, but the bullish “defensive compounder” framing overstates the runway. This is not a structurally deteriorating business: gross profit rose to $9.97B in FY2025 from $9.82B in FY2024, quarterly net margins are still running 11%-13%+, and the business continues to throw off meaningful cash after $1.33B of capex. If anything, AutoZone has proven unusual resilience. But investors are not buying resilience at 12x earnings; they are paying a premium multiple for stability plus buybacks plus some expectation of resumed per-share compounding. The raw financials do not show enough acceleration to justify that. If earnings are flat to down and free cash flow is under pressure while the stock sits above 20x earnings, the burden of proof belongs to the bull case.
The best argument against my caution is straightforward: mature does not mean ex-growth in per-share terms, and AutoZone has historically turned an ordinary revenue line into excellent shareholder returns through margins, working capital discipline, and repurchases. The latest quarter’s 8.5% revenue growth and 13.3% net margin are hardly signs of a fading retailer, and the May quarter’s profit increase suggests FY2025 may have been a temporary reset rather than a new plateau. If same-store sales and commercial penetration reaccelerate, a 20x multiple may prove entirely reasonable for a business with 50%+ gross margins, 19% operating margins, and strong recession resistance. I also think the more alarmist debt concerns are misplaced: current ratio below 1 and negative book equity are not unusual tells of distress here; the real solvency anchor is billions in recurring operating cash flow, and on that measure AutoZone is sound.
What would change my mind is evidence that FY2025 was the trough, not the trend. If the next few quarters show revenue growth sustaining above 6%-7% while net income growth turns solidly positive again, especially if annual free cash flow recovers back above $2.2B without margin sacrifice, then paying near 20x earnings would look far more defensible. Conversely, if quarterly sales stay in the 2%-4% range and net margins drift from the recent 13%-14% zone toward 11%-12% more consistently, the stock deserves a mid-to-high teens earnings multiple instead of 21x. On today’s numbers, I think fair value is closer to $2,500-$2,700 than $3,025.
Grok Reading
AutoZone at $3,025 is a high-quality mature retailer being asked to justify a growth multiple it is no longer earning. Fiscal 2025 revenue of $18.94B grew only 2.4% from $18.49B, and the five-year revenue CAGR sits at a pedestrian 4.2%. Net income has already rolled over—from $2.66B in 2024 to $2.50B in 2025—while operating income slipped from $3.79B to $3.61B. The momentum tape is worse than the annuals: recent earnings down 6.2% year-over-year and free-cash-flow CAGR at –8.6%. You are paying 20.9× trailing earnings and 13.8× EV/EBITDA for a business whose top line is decelerating, whose FCF has compressed from the buyback engine’s historical pace, and whose domestic store base is largely saturated. The latest quarter ($4.84B revenue, 13.3% net margin) looks fine in isolation, but it does not reverse the multi-year fade in earnings power or the fact that FCF of $1.79B on $3.12B of operating cash flow is being absorbed by $1.33B of capex before any meaningful deleveraging.
The capital structure is the tell. Negative equity of –$3.41B against $8.80B of debt and a wafer-thin $272M cash balance is not an accident; it is the deliberate residue of years of leveraged buybacks. That model works brilliantly when FCF is compounding and the multiple is expanding. It becomes a trap when FCF is shrinking 8–9% annually and the stock still sits 40% above a DCF that already embeds mid-teen cash returns. Gross margin at 52.6% and operating margin at 19.1% remain elite for specialty retail, and ROA of 12.9% confirms the stores still print money. None of that changes the arithmetic: at 21× earnings with low-single-digit organic growth and negative earnings momentum, the market is capitalizing a mid-single-digit compounder as if double-digit EPS growth were still the base case.
The strongest counter-argument is that AutoZone’s moat and capital-return machine have survived every prior cycle of skepticism. The aging ICE fleet, non-discretionary DIY/DIFM demand, and commercial penetration runway versus O’Reilly are real; the 31% drawdown from the 52-week high already prices some consumer and EV anxiety; and peers still clear richer multiples, so relative value bulls can claim AZO is the cheaper quality compounder. Share shrink can keep EPS rising even if net income is flat, and the current ratio of 0.88 has never bothered the market because the cash conversion cycle is so short. Those points keep me from table-pounding a short. They do not, however, justify paying $3,025 when the composite and signal-adjusted fair-value work clusters between roughly $2,100 and $2,500 and when every growth vector that historically supported the premium—revenue acceleration, FCF expansion, margin lift—is currently pointed the wrong way.
I would flip if trailing twelve-month revenue growth re-accelerates through 6–7% with stable or expanding operating margins, if free cash flow stabilizes above $2.2B and begins compounding again, or if the stock compresses into the mid-teens P/E while commercial comps clearly outpace DIY for several consecutive quarters. Until one of those arrives, the price is ahead of the fundamentals.
Big-3 Panel — where each AI stands
Advanced Analysis Forensic deep-dive · separate lenses
AutoZone's operating engine looks genuinely durable: revenue grew from $14.63B (2021) to $18.94B (2025), gross margin has been remarkably stable in a tight 52-53% band, and operating margin has held near 19-20.5% across five years. Earnings quality reinforces the picture - OCF/NI at 1.3x, accruals at -4.4% of assets, and Beneish M of -2.42 all indicate that reported profits are cash-backed, not accrual-inflated. Altman Z of 2.53 (grey) is the one structural caveat, reflecting a heavily leveraged, buyback-funded capital structure rather than operational distress. Per-share value protection is elite: diluted share count has fallen from 22.8M to 17.2M, a ~25% reduction in four years, meaning even flat net income translates to materially higher EPS. Net income did dip in 2025 ($2.50B vs $2.66B in 2024) and FCF has trended down every year from $2.90B (2021) to $1.79B (2025) - a ~38% decline while revenue rose ~30%. This FCF-vs-revenue divergence is the single most important signal to interrogate: it likely reflects higher inventory investment and megahub capex, but it deserves scrutiny. Operating margin also slipped to 19.1% in 2025, the lowest of the five-year window. Insider tape is essentially empty (a gift and a small award), so no directional read. Overall this is a well-run, moaty aftermarket retailer with clean accounting and disciplined capital return, showing early-cycle softening but no structural cracks.
Verify before trusting this (5)
- Drivers of the 2021-2025 FCF decline - is it megahub capex, inventory investment, or working capital deterioration?
- 2025 operating margin compression cause - SG&A deleverage, commercial mix, or wage pressure?
- Total debt level and interest coverage given the negative/thin book equity from cumulative buybacks
- Commercial (DIFM) segment growth and margin profile vs DIY
- Same-store sales trends underlying the 2025 revenue deceleration to +2.4%
All three valuation methods land below the $3,025 price: DCF $2,484, EPV floor $2,169, and even the generous anchored-PE at $2,994 barely reaches today's tape. The composite fair value of $2,532 implies roughly 16% downside, and the signal-adjusted $2,128 implies ~30% downside. Earnings quality is high so I am not haircutting further, but I am also not adding a premium: the quality is already reflected in the anchored-PE method, and price still exceeds it. This is a strong business (quality score 53) that the market fully understands - the buyback narrative, moat, and defensiveness are priced in. To justify $3,025 you need either sustained margin expansion or a re-rating above the historical multiple, both of which run against the 2025 FCF and margin softening flagged by the quality lens. Nothing here says 'cheap' - the honest read is 'priced for continued perfection in a business that just showed its first crack.'
Verify before trusting this (4)
- Q4/FY guidance on gross margin trajectory and whether the 2025 dip is one-time investment or structural
- Buyback pace vs FCF generation - is the company still self-funding repurchases or leaning on the balance sheet
- Commercial (DIFM) segment growth rate - the key swing factor for the anchored-PE multiple
- SG&A growth vs revenue to confirm whether labor cost pressure is transient
The macro tape is mildly risk-on (VIX 14.3, S&P near highs), but with beta 0.34 AZO barely feels the tape either way - the market regime is close to neutral for this name. What actually matters here is the narrative layer. AutoZone sits inside a suddenly-in-vogue 'anti-AI' defensive basket (the new ETF headline explicitly frames engines, trucks and HVAC as software-portfolio hedges), and AZO is the archetypal recession-resistant compounder in that trade. That is a genuine, if quiet, sentiment tailwind - money rotating toward boring cash-flow names finds AZO by default. Momentum is positive and volatility of results is low, which reinforces the compounder story. On the other side, the Parnassus letter framing ('outperformance running out of fuel') and the 4.3% unexplained drop on 7/30 hint at a subtle narrative fatigue - the stock has worked for a long time and some holders are questioning whether the premium can keep expanding. Analyst tone is not screaming either way. Net: a modest tailwind from defensive rotation and low-beta stability, lightly offset by 'crowded winner' concerns.
Verify before trusting this (4)
- Whether the anti-AI / defensive-rotation ETF theme gains flow traction or fades in a week
- Q4 earnings tone - any hint of margin pressure would validate the 'running out of fuel' framing
- Analyst target revisions post-print - are estimates still creeping higher or flattening
- Whether risk-on tape broadens into cyclicals and pulls flow away from defensive compounders
The world is kind to this business model and unkind to its margin structure. High vehicle prices and elevated financing costs keep owners repairing rather than replacing, which is why revenue never goes negative — the demand floor is real and macro headwinds arguably reinforce it. But the same world delivers wage inflation, a costly distribution build-out, and adverse FX from the fastest-growing (Latin American) units, and those land squarely on operating income. Meanwhile the category itself has matured: 4.3% industry CAGR with a slowdown flag means the era of consolidating a fragmented aftermarket is largely done, so incremental growth must come from taking commercial accounts one garage at a time and from opening stores abroad. Electrification is a real but slow-acting reducer of the parts basket per vehicle — irrelevant to the next eight quarters, material to any terminal assumption. Net: a durable, low-amplitude business whose forward growth is a function of self-help (hubs, share count, international units) rather than any rising tide.
When we made this prediction on Aug 17, 2026, AZO was $3,025.00. We expect it to be $2,860.00 by Feb 2027, and we consider it great value under $2,400.00. This is an early model (v0.6.0) — the direction is more reliable than the exact price. Made Aug 17, 2026.
Blue is our prediction, starting the day we made it. Grey is a slower route to the same place — the same destination, taking longer. Black is the actual price, so you can see how we are doing.
Post-Report Due Diligence NOTES
Evidence for a closer look, not a verdict — no score or designation on this page has been changed by it. Items marked material are ones where a conclusion above moves to the other side of the price.
trailing_eps
flips down 25%
adjusted_pe
flips down 25%