AutoZone, Inc.

(New York Stock Exchange)
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Somewhat Bearish -25

Is AutoZone Stock Priced Right Against Its Peers?

Same-store sales Store expansion AI-generated analysis

📉 AutoZone trades at a lower P/E multiple of 20.2 compared to O'Reilly Automotive's 28.0, reflecting investor concerns about its growth trajectory.

📈 Domestic commercial sales to professional customers rose 8.6% in the fiscal fourth quarter ended August 29, 2026, driving overall revenue growth.

📉 Same-store sales for do-it-yourself shoppers fell 0.6% in the same period as fewer customers visited existing locations.

🏗️ AutoZone opened 374 stores in fiscal 2026, its highest annual store count on record, focusing on new locations and Mega Hubs.

💰 Operating margin was 18.3%, finishing just below O'Reilly's 19.6% despite similar sales growth rates.

📊 Total return for AutoZone shares was -12.9% in the year to November 3, 2026, underperforming O'Reilly's -4.7% loss.

🔮 Management forecasts domestic same-store sales to be flat to low single digits for fiscal 2027 with a 4% average ticket increase.

⚠️ Rapid store expansion has pressured returns on capital, though management expects improvement as new locations mature.

📅 The first quarter of fiscal 2027 is expected in December 2026 and will be critical for assessing same-store sales stability.

Bullish Signals
  • AutoZone's domestic commercial sales to professional customers rose 8.6% year-over-year in the fiscal fourth quarter ended August 29, 2026.
  • The retailer opened 374 stores in fiscal 2026, the most it has ever opened in a single year, with new locations running slightly ahead of plans.
  • Average ticket size for do-it-yourself customers increased roughly 5% despite fewer visits, indicating higher spending per transaction.
  • AutoZone operates 172 Mega Hub stores which management identifies as a key component of its commercial growth strategy.
Risk Factors
  • Domestic do-it-yourself same-store sales fell 0.6% in the fiscal fourth quarter ended August 29, 2026, signaling weakness in the traditional customer base.
  • Management admitted that same-store sales growth of 1.5% was lower than desired, reflecting a shift away from existing locations.
  • AutoZone shares underperformed peers over the past year, losing 12.9% in total return compared to O'Reilly's 4.7% loss.
  • Faster store openings have pressured returns on capital, creating a short-term drag on financial performance as new locations mature.
Full Analysis
AutoZone (AZO) trades at a valuation discount compared to its primary rival, O'Reilly Automotive, with a price-to-earnings multiple of 20.2 versus 28.0 for the latter over comparable periods. Despite this lower multiple, AutoZone's fundamental business metrics remain competitive, posting sales growth of 7.4% and an operating margin of 18.3%, which are slightly below O'Reilly's respective figures of 8.5% and 19.6%. The stock has underperformed its peers over the past year, losing 12.9% in total return compared to a 4.7% loss for O'Reilly. AutoZone is currently shifting its growth strategy away from traditional do-it-yourself (DIY) customers toward professional clients and new store openings. In the fiscal fourth quarter ended August 29, 2026, domestic commercial sales to professional customers rose 8.6%, while same-store sales for DIY shoppers fell 0.6%. Management attributes this shift to DIY customers trading down and delaying repairs, resulting in fewer visits despite a roughly 5% increase in average ticket size per visit. The retailer executed an aggressive expansion plan in fiscal 2026, opening 374 stores, the most in a single year, alongside operating 172 Mega Hub locations focused on commercial growth. While these new locations are running slightly ahead of sales and profit plans, management acknowledges that rapid store openings have pressured returns on capital. For fiscal 2027, AutoZone forecasts flat to low single-digit domestic same-store sales growth with a 4% increase in average ticket, expecting faster expansion from the professional customer segment. Analysts view the lower valuation as reflecting concerns that existing stores will continue to lose DIY traffic while the company incurs costs for new locations. Management expects returns on capital to rise as new stores mature, but the stock's performance hinges on whether same-store sales can stabilize in the first quarter of fiscal 2027, which is expected to be reported in December 2026.