AZO

Cyclical

AutoZone

Price Chart

Market Data

Financials

XBRL · SEC EDGAR

2008–2025(18yr)

Revenue

Net Income

Free CF

Metric	FY 2008	FY 2009	FY 2010	FY 2011	FY 2012	FY 2013	FY 2014	FY 2015	FY 2016	FY 2017	FY 2018	FY 2019	FY 2020	FY 2021	FY 2022	FY 2023	FY 2024	FY 2025Latest	YoY
Revenue	$6.5B	$6.8B	$7.4B	$8.1B	$8.6B	$9.1B	$9.5B	$10.2B	$10.6B	$10.9B	$11.2B	$11.9B	$12.6B	$14.6B	$16.3B	$17.5B	$18.5B	$18.9B	+2.4%
Gross Profit	$3.3B	$3.4B	$3.7B	$4.1B	$4.4B	$4.7B	$4.9B	$5.3B	$5.6B	$5.7B	$6.0B	$6.4B	$6.8B	$7.7B	$8.5B	$9.1B	$9.8B	$10.0B	+1.5%
Gross Margin	50.1%	50.1%	50.4%	51.0%	51.5%	51.8%	52.1%	52.3%	52.7%	52.7%	53.2%	53.7%	53.6%	52.8%	52.1%	52.0%	53.1%	52.6%	-0.5pp
Operating Income	$1.1B	$1.2B	$1.3B	$1.5B	$1.6B	$1.8B	$1.8B	$2.0B	$2.1B	$2.1B	$1.8B	$2.2B	$2.4B	$2.9B	$3.3B	$3.5B	$3.8B	$3.6B	-4.7%
Operating Margin	17.2%	17.3%	17.9%	18.5%	18.9%	19.4%	19.3%	19.2%	19.4%	19.1%	16.1%	18.7%	19.1%	20.1%	20.1%	19.9%	20.5%	19.1%	-1.4pp
Net Income	$641.6M	$657.0M	$738.3M	$849.0M	$930.4M	$1.0B	$1.1B	$1.2B	$1.2B	$1.3B	$1.3B	$1.6B	$1.7B	$2.2B	$2.4B	$2.5B	$2.7B	$2.5B	-6.2%
Net Margin	9.8%	9.6%	10.0%	10.5%	10.8%	11.1%	11.3%	11.4%	11.7%	11.8%	11.9%	13.6%	13.7%	14.8%	14.9%	14.5%	14.4%	13.2%	-1.2pp
Free Cash Flow	$677.5M	$651.6M	$880.9M	$969.9M	$845.9M	$1.0B	—	—	$1.2B	$1.0B	$1.6B	$1.6B	$2.3B	$2.9B	$2.5B	$2.1B	$1.9B	$1.8B	-7.3%
FCF Margin	10.4%	9.6%	12.0%	12.0%	9.8%	10.9%	—	—	10.8%	9.3%	13.9%	13.8%	17.9%	19.8%	15.6%	12.3%	10.4%	9.5%	-1.0pp
EPS (Diluted)	$10.04	$11.73	$14.97	$19.47	$23.48	$27.79	$31.57	$36.03	$40.70	$44.07	$48.77	$63.43	$71.93	$95.19	$117.19	$132.36	$149.55	$144.87	-3.1%

Total Debt$8.8B

Cash & Equiv.$271.8M

Net Debt$8.5B

3 min read

1. THE BIG PICTURE

AutoZone is evolving from a dominant DIY retail specialist into a dual-threat distributor by aggressively scaling its commercial sales and international footprint. While this pivot drove an 8.1% jump in quarterly revenue, the cost of building this infrastructure is currently eating into profits, resulting in a rare decline in net income and earnings per share (8-K).

2. WHERE THE RISKS HIT HARDEST

AutoZone’s "value leader" positioning is threatened by global trade volatility because its pricing power depends on a low-cost supply chain currently vulnerable to tariffs on imports from Canada, China, and Mexico (10-K Item 1A). Furthermore, AutoZone’s reliance on "WOW! Customer Service" as a competitive differentiator creates a structurally higher cost base that is difficult to trim when competing against online retailers with lower operating models (10-K Item 1A). Finally, the logistical advantage of its "mega hub" network is highly sensitive to distribution disruptions; any labor disputes or capacity constraints in the supply chain immediately translate into lost sales at the store level (10-K Item 1A).

3. WHAT THE NUMBERS SAY TOGETHER

The financial data reveals a company in a heavy investment phase. While AutoZone’s 52.6% gross margin remains a sector-leading strength—second only to eBay—its operating expenses have surged to 36.1% of sales in the most recent quarter, up from a 19.1% annual baseline (8-K, XBRL). This "deleverage," as management calls it, explains why net income fell to $468.9 million despite the 8.1% revenue climb (8-K).

The divergence between the TTMTTMTrailing Twelve Months — the most recent full year of financial data, updated on a rolling basis each quarter revenue growth of 2.4% and the most recent quarter’s 8.1% growth is largely explained by a rapid footprint expansion: AutoZone opened 64 net new stores in a single quarter, including significant pushes into Mexico and Brazil (8-K). Despite the earnings dip, AutoZone remains the group's most efficient cash generator, with an 11.0% Free Cash Flow (FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders) margin that leads all peers, including O’Reilly and Home Depot (XBRL).

4. IS IT WORTH IT AT THIS PRICE?

At a forward P/EP/EPrice-to-Earnings ratio — share price divided by annual earnings per share; how much investors pay per dollar of profit. Higher P/E = higher growth expectations of 21.4x, AutoZone is trading almost exactly in line with the peer median of 22.0x (Yahoo Finance). This valuation is supported by its superior FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders margin (11.0%) but tempered by a revenue growth rate (+2.4%) that lags behind O’Reilly (+6.4%) and Carvana (+48.6%).

At this price, the market is pricing in roughly 1.8% long-term growth (CAPM analysis). This appears credible, as AutoZone is currently delivering 2.4% revenue growth and using its cash to retire shares, providing a 2.5% buyback yield (XBRL). However, for this valuation to hold, AutoZone must prove that its recent spike in operating expenses is a temporary investment in growth rather than a permanent shift in the cost of doing business. The biggest risk to this price is a "margin squeeze" where tariffs increase product costs while intense competition prevents AutoZone from raising prices on consumers.

5. WHAT WOULD CHANGE THIS VIEW?

Constructive if operating expenses as a percentage of sales begin to retreat toward the 19.1% historical baseline, signaling that the new stores and commercial programs are reaching efficient scale.
Cautious if gross margins fall below 50%, which would indicate that trade tariffs or competitive pricing from online retailers are successfully eroding AutoZone’s primary source of profit.

6. BOTTOM LINE

Structural Advantage: A high-density "hub and mega hub" logistical network that ensures superior local parts availability and an industry-leading 11.0% FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders margin.

Bottom Line: AutoZone is a high-quality cash compounder currently undergoing a noisy transition, making it a stable hold for those who believe its store-expansion strategy will eventually restore earnings growth.

Source: Synthesis · LLM Analysis

3 min read

1. Top 5 Material Risks

Global Trade and Tariffs: New and potential future tariffs on imports from countries including Canada, China, and Mexico threaten to increase product costs and disrupt supply chains, potentially impacting AutoZone’s pricing and competitive position (10-K Item 1A).
Macroeconomic Sensitivity: Demand for automotive parts is highly sensitive to economic conditions; inflation, high interest rates, and consumer debt levels may cause customers to defer maintenance, while expansionary periods may lead DIY customers to switch to professional repair services or new vehicle purchases (10-K Item 1A).
Competitive Margin Pressure: AutoZone faces significant competition from retailers with lower operating costs and more aggressive delivery services; because AutoZone’s strategy relies on superior customer service, its higher cost structure creates ongoing pressure on profit margins (10-K Item 1A).
Supply Chain and Distribution Disruptions: AutoZone’s reliance on a complex distribution network makes it vulnerable to capacity constraints, labor disputes, and natural disasters, which can lead to inventory shortages and lost sales (10-K Item 1A).
Technological and Vehicle Trends: Advances in automotive technology, such as improved parts design and the increasing prevalence of electric vehicles, may reduce the frequency of parts failures and the overall demand for replacement components (10-K Item 1A).

2. Company-Specific Risks

Labor Force and Unionization: With approximately 130,000 employees, AutoZone faces risks related to rising wage pressures and potential unionization efforts, which could increase labor costs and disrupt AutoZone’s operating model and culture (10-K Item 1A).
International Expansion Challenges: Operating in Mexico and Brazil requires adapting to different vehicle fleets and consumer behaviors; these international operations also expose AutoZone to foreign currency exchange rate fluctuations that impact reported financial performance (10-K Item 1A).
Information Technology and Cybersecurity: AutoZone relies on extensive IT systems for inventory, sales, and supply chain management; any failure, cyber-attack, or unsuccessful implementation of new technology initiatives could disrupt operations and result in significant remediation costs (10-K Item 1A).
Self-Insurance Exposure: AutoZone is self-insured for workers’ compensation, medical, and liability claims; material increases in claim frequency or severity could lead to an unfavorable difference between actual costs and established reserves (10-K Item 1A).

3. Regulatory/Legal Risks

Data Privacy Compliance: AutoZone is subject to a complex and evolving body of state and federal data protection laws; failure to comply with these requirements could lead to regulatory enforcement actions, fines, and litigation (10-K Item 1A).
Climate Change Legislation: Potential mandatory reporting requirements for greenhouse gas (GHG) emissions and new regulations on automobile fuels could increase compliance costs and adversely affect demand for the products AutoZone sells (10-K Item 1A).
Employment Law: Changes in federal and state laws regarding minimum wage, overtime exemptions, and benefits could result in increased labor costs and negatively impact operating results (10-K Item 1A).

4. Financial Impact Map

Global Trade Tariffs → Cost of Goods Sold → Potential increase in product costs for the 13% of purchases directly imported by AutoZone, plus indirect costs from domestic vendors who import components.

Macroeconomic Downturns → Net Sales → Reduced revenue due to lower same-store sales as consumers defer vehicle maintenance and repairs.

Competitive Cost Structures → Operating Margin → Pressure on margins resulting from AutoZone’s higher cost structure relative to online and multi-channel competitors.

Labor Cost Inflation → Operating Expenses → Increased workforce costs, which represent the largest operating expense for AutoZone, driven by prevailing wage rates and potential regulatory changes.

Cybersecurity Incidents → Operating Expenses → Significant costs associated with remediation, legal defense, and potential regulatory fines in the event of a data breach.

Source: 10-K Item 1A · LLM Analysis

Recent Filings

Form	Filed	Period
8-K	Mar 2026	—
10-Q	Dec 2025	Nov 2025
10-K	Oct 2025	Aug 2025