- Company name
- AutoZone
- Sector
- Auto parts retail
- About
- AutoZone sells car parts. Its stores sell to people who repair their own cars (do-it-yourself), and they also sell parts to repair shops (the commercial business). At August 29, 2026, AutoZone had 8,031 stores: 6,863 in the United States, 1,001 in Mexico and 167 in Brazil. It opened a record 374 stores in fiscal 2026 and adds large hub stores that hold more parts. It also buys back its own stock every year, so profit per share grows faster than profit.
- Thesis
- The market doubts that AutoZone can keep its past growth in profit per share. Three facts hold the price down. First, domestic same-store sales grew only 1.6% in the fourth quarter of fiscal 2026, and management expects them to be about flat in the first quarter of fiscal 2027. Second, tariff refunds and a LIFO accounting gain caused all of the fourth-quarter gross margin increase. Without these one-time items, gross margin fell. Third, the buyback now shrinks the share count more slowly. Diluted shares fell 2.2% in fiscal 2026, after falls of 7% to 9% a year in fiscal 2022 and 2023. Buybacks were larger than free cash flow, so new debt pays for part of them. Debt stays at the company's goal of about 2.5 times EBITDAR. For the gap to close, domestic same-store sales must grow 2% or more again. Gross margin must hold without one-time items. The new stores and hubs must add enough sales and cash flow to pay for their cost. The first evidence comes with the first-quarter fiscal 2027 report, expected around December 8, 2026. The second-quarter report in March 2027 shows cash flow against the buyback. The gap can close over the next three to four quarters. If do-it-yourself demand stays weak and store spending keeps free cash flow flat, the discount can continue.
- Risks
- Domestic same-store sales are weak. They grew only 1.6% in the fourth quarter of fiscal 2026, and management expects about flat sales in the first quarter of fiscal 2027. If they stay weak, profit per share grows slowly.
Buybacks of $2.03 billion in fiscal 2026 were larger than free cash flow of $1.81 billion. AutoZone keeps adjusted debt at about 2.5 times EBITDAR, so debt can grow only as fast as EBITDAR. If cash flow does not grow, the buyback must slow.
AutoZone spends more on new stores and hubs. Capital spending was $1.50 billion in fiscal 2026. If the new stores do not add enough sales, this spending lowers free cash flow and the buyback.
Banks fund a large part of AutoZone's payables through supplier finance programs ($5.6 billion at May 9, 2026). A change in these programs or a lower credit rating could require more debt.
- Balance sheet
- Cash: $326M
Debt: $9.1B
Net debt: $8.8B
Interest cover: 7.9×
Ratings: Moody's Baa1 (stable outlook), S&P BBB (stable outlook), Fitch BBB (stable outlook)
AutoZone had a stockholders' deficit of $2.50 billion at August 29, 2026. The reason is that, over many years, it spent more on buybacks than it earned and kept. The business makes steady cash, and management keeps debt at a level that gives investment-grade ratings. All debt is unsecured at the parent: fixed-rate senior notes plus commercial paper. Commercial paper was $1.36 billion at May 9, 2026, at 3.96%; the year-end figure comes with the 10-K. In July 2026, AutoZone added $850 million of 4.95% notes due 2031, and $450 million of 5.05% notes became due. The company's own measure is adjusted debt: debt, plus finance leases of $417 million, plus 6 times rent. Adjusted debt of $12.50 billion was 2.48 times EBITDAR of $5.04 billion for fiscal 2026 (2.49 times a year earlier). This is at the company's goal of about 2.5 times. Suppliers fund a large part of the inventory: accounts payable of $8.60 billion were 111% of inventory of $7.74 billion. At May 9, 2026, $5.6 billion of payables were in supplier finance programs with banks. The $2.25 billion revolving credit facility runs to November 2028 and was undrawn at May 9, 2026. In fiscal 2026, operating cash flow of $3.30 billion less capital spending of $1.50 billion gave free cash flow of $1.81 billion. Buybacks of $2.03 billion were larger, so new debt paid for part of them.
As of 2026-08-29.
- Checkpoints
- Sep 22, 2026: Q4 fiscal 2026 results: sales growth and margin. Failed. 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%, but tariff refunds and a LIFO gain caused all of the 1.82-point gross margin gain, and domestic same-store sales grew only 1.6%.
Dec 8, 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.
- Recent events
- 2026-10-09: AutoZone said that director Claire McDonough will not stand for re-election at the 2026 annual meeting. The company said this was not because of a disagreement.
2026-09-25: Fitch affirmed AutoZone's BBB rating with a stable outlook. Fitch says it can lower the rating if leverage on its own measure goes above 3.5 times.
2026-09-22: AutoZone reported Q4 fiscal 2026 results (16 weeks to August 29, 2026). Net sales grew 5.6% to $6.59 billion, a little below the about $6.7 billion analysts expected. Domestic same-store sales grew 1.6%. Diluted EPS was $56.05, above the consensus of about $54.5 (Zacks). Gross margin rose 1.82 percentage points, but tariff refunds (1.45 points) and a LIFO gain (1.05 points) caused all of the rise.
2026-07-14: AutoZone sold $850 million of 4.95% senior notes due July 2031.
2026-06-16: AutoZone's board approved an additional $1.5 billion for share repurchases, bringing total authorized buybacks since 1998 to $42.2 billion.
2026-05-26: AutoZone reported its third quarter of fiscal 2026 (12 weeks to May 9, 2026). Sales grew 8.4% to $4.84 billion. Operating profit (EBIT) grew 6.6%, slower than sales, so the operating margin fell slightly.