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AZO changes

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View the full Oct 1, 2026 version
Price
$2872.16 → $2830.02(−1.5%)
Discount
22.4% → 23.5%(+1.1 pts)
Thesis
AutoZone buys back about 8% of its shares every year. This shrinking share count drives most of its profit-per-share growth. The market doubts how long this pace can continue. AutoZone borrows money to fund part of the buyback. Net debt already sits above its own target range. For the discount to close, store sales must keep growing. Cash flow must also catch up to the buyback pace, so debt does not keep rising against earnings. The board added $1.5 billion to the buyback authorization in June 2026, a sign it still wants to keep this pace. Q4 fiscal 2026 results, reported September 22, 2026, showed sales up 5.6% and expanding margins. Gross margin rose, but a good sign forone-time tariff refund caused most of the buybackrise, so the margin gain does not show lasting strength. The next quarterly report is expected around December 22, 2026. If sales growth and cash flow both hold up over the next two to three quarters, the discount can close. If debt keeps rising faster than cash flow, AutoZone may need to slow the buyback, and the discount could persist.