- About
- AutoZone sells car parts. It runs retailIts stores sell to people who repair their own cars (do-it-yourself), and itthey also sellssell parts in bulk to repair shops (the commercial business). At August 29, 2026, AutoZone does not grow mainly by opening many newhad 8,031 stores: 6,863 in the United States, 1,001 in Mexico and 167 in Brazil. It grows profit per share mainly by buyingopened 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 buys back about 8% ofcan keep its shares every year. This shrinking share count drives most of itspast growth in profit -per -share growth. The market doubts how long this pace can continue. AutoZone borrows money to fund part ofThree facts hold the buybackprice down. Net debt already sits above its own target range. For the discount to closeFirst, domestic same-store sales must keep growinggrew only 1. Cash flow must also catch up6% in the fourth quarter of fiscal 2026, and management expects them to be about flat in the buyback pacefirst quarter of fiscal 2027. Second, so debt does not keep rising against earningstariff refunds and a LIFO accounting gain caused all of the fourth-quarter gross margin increase. The board added $1Without these one-time items, gross margin fell.5 billion to Third, the buyback authorizationnow shrinks the share count more slowly. Diluted shares fell 2.2% in Junefiscal 2026, a sign it still wantsafter falls of 7% to keep this pace. Q49% a year in fiscal 2026 results2022 and 2023. Buybacks were larger than free cash flow, reported September 22, 2026, showed sales up so new debt pays for part of them. Debt stays at the company's goal of about 2.5 times EBITDAR.6 For the gap to close, domestic same-store sales must grow 2% or more again. Gross margin rose, but amust hold without one-time tariff refund caused most of the rise, so the margin gain does not show lasting strengthitems. The next quarterlynew 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 is, expected around December 8, 2026. If sales growth andThe second-quarter report in March 2027 shows cash flow both hold upagainst the buyback. The gap can close over the next two to three to four quarters, the discount can close. If debtdo-it-yourself demand stays weak and store spending keeps rising faster thanfree cash flow flat, AutoZone may need to slow the buyback, and the discount could persistcan continue.
- Risks
- AutoZone borrows money to fund its buybackDomestic same-store sales are weak. On the company's own measure, adjusted debt was 2They grew only 1.5 times EBITDAR6% in the fourth quarter of fiscal 2026, and management expects about flat sales in the first quarter of fiscal 20252027. This is within its targetIf they stay weak, profit per share grows slowly. But buybacks are
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 the buyback pace depends on debt that grows withcan grow only as fast as EBITDAR.
The buyback needs steady If cash flow. Cash flow has grown slower than does not grow, the buyback pacemust slow.
AutoZone spends more on new stores and hubs. Capital spending was $1.50 billion in recent yearsfiscal 2026. If this gap continuesthe new stores do not add enough sales, AutoZone may need to slowthis spending lowers free cash flow and the buyback.
If the buyback slows, profit-per-share growth slows too. PartBanks fund a large part of the stockAutoZone's value depends on the buyback continuingpayables through supplier finance programs ($5.6 billion at its current paceMay 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 $2.550 billion at August 29, 2026. The reason is that, over many years, it spent more on buybacks than it earned and kept. This is a choice, not distress. The business makes steady cash, and management setskeeps debt to keepat a level that gives investment-grade ratings. TotalAll debt was $9.08 billion at that date, allis unsecured at the parent. It was: 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 $12.550 billion was 2.548 times EBITDAR of $5.04 billion for fiscal 2026, the same as (2.49 times a year earlier). EBITThis is at the company's goal of $3.72 billion covered interest of $473 million about 72.95 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. A change in these programs or in AutoZone's rating could require more debt. Liquidity comes from cash ofThe $326 million and a $2.25 billion revolving credit facility runs to November 2028, and was undrawn at May 9, 2026. S&P rates AutoZone BBB and Moody's rates it Baa1, both stable at the last affirmations found (March 2025 and March 2024). Buybacks of $2.0 billion inIn fiscal 2026 were larger than free cash flow. In the 36 weeks to May 9, 2026, operating cash flow of $23.1230 billion less capital spending of $1.0050 billion gave free cash flow of $1.1281 billion. Buybacks in the same period wereof $12.3203 billion. Thus the buyback pace depends on were larger, so new debt growing with EBITDARpaid for part of them.
As of 2026-08-29.
- Checkpoints
- Sep 22, 2026: Q4 fiscal 2026 results: sales growth and margin. PassedFailed. 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 EPSa LIFO gain caused all of $56the 1.05 beat estimates82-point gross margin gain, butand domestic same-store sales grew only 1.6% and tariff refunds gave most of the 182 basis point margin gain.
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 on this date: net(16 weeks to August 29, 2026). Net sales ofgrew 5.6% to $6.659 billion, up 5a little below the about $6.7 billion analysts expected. Domestic same-store sales grew 1.6%, and diluted. Diluted EPS ofwas $56.05, above the consensus of about $54.08 analysts expected5 (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.
2026-0605-0126: AutoZone's most recent reported its third quarter: sales of fiscal 2026 (12 weeks to May 9, 2026). Sales grew 8.4% to $4.84 billion. Operating profit (EBIT) grew 6.6%. EBIT grew, slower than sales, so the operating margin fell slightly.