- Price
- $2830.02 → $2939.85(+3.9%)
- Discount
- 23.5% → 20.5%(−3.0 pts)
- Next earnings
- 2026-12-22 → 2026-12-08
- 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%. Gross margin rose, but a one-time tariff refund caused most of the rise, so the margin gain does not show lasting strength. The next quarterly report is expected around December 228, 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.
- Checkpoints
- Sep 22, 2026: Q4 fiscal 2026 results: sales growth and margin. Passed. Watch: Sales growth near or above 5% with a lasting gross margin gain passes; slower sales or a margin gain from one-time items only fails. Outcome: Net sales rose 5.6% and EPS of $56.05 beat estimates, but domestic same-store sales grew only 1.6% and tariff refunds gave most of the 182 basis point margin gain.
Dec 228, 2026 (estimate): Q1 fiscal 2027 results: same-store sales and buyback pace. Pending. Watch: Domestic same-store sales growth of 2% or more with buybacks at a steady pace and adjusted debt near 2.5 times EBITDAR passes; weaker sales or leverage above about 2.6 times fails.
Mar 2027 (estimate): Q2 fiscal 2027 results: cash flow against buybacks. Pending. Watch: Free cash flow that grows faster than the buyback pace passes; buybacks funded mostly by new debt fail.