AutoZone (AZO), a Zacks Rank #5 (Strong Sell), is a top specialty retailer and distributor of auto parts, serving both DIY and DIFM customers.
The company just posted earnings, with investors buying the dip and helping the stock trade near all-time highs. Despite strong price momentum, up more than 30% this year, earnings estimates have been trending lower. With valuation concerns starting to creep in, investors may want to think twice before chasing the rally.
About the Company
As of August 30, 2025, the company operated 7,657 stores across the United States, Mexico, and Brazil, offering a broad assortment of new and remanufactured parts, maintenance items, accessories, and even select non-automotive products.
Its product range covers nearly every aspect of vehicle upkeep and repair, from batteries, brakes, and engines to fluids, filters, lighting, and wipers. In addition to retail, AutoZone runs commercial sales programs that deliver parts directly to garages, service stations, and repair shops, while also providing credit options for business customers.
Beyond its physical store presence, AutoZone maintains a strong digital footprint with platforms like autozone.com for retail customers and autozonepro.com for
The company has a market cap of $70B and holds Zacks Style Scores of “F” in Value and Momentum.
Q4 Earnings
AutoZone’s quarter was mixed, with EPS of $48.71 missing the $50.52 consensus while revenue of $6.24 billion matched expectations. Same-store sales rose 4.5%, with U.S. comps up a solid 4.8% versus just 0.2% last year, but international comps of 2.1% fell short due to currency headwinds.
Gross margin slipped nearly 100 basis points to 51.5%, pressured by an $80 million non-cash LIFO charge.
Commercial sales remained a bright spot, with U.S. comps accelerating to 12.5% on a 16-week basis, while DIY trends showed modest improvement.
However, traffic declined 1.9% during the quarter, turning positive only late in the period. Inventory climbed to $7.03 billion from $6.16 billion a year ago, reflecting both inflation and store expansion.
Management expressed confidence heading into FY26, but the earnings miss, margin pressure, and inventory build suggest investors should be cautious with shares trading near record highs.
Earnings Estimates See Recent Drop
Since earnings, analyst estimates have taken a leg lower:
For the current quarter, estimates have fallen from $166.93 to $152.84, or 8%.
For next quarter, estimates have gone from $184.98 to $180.06, or 3%.
The drop from analysts reflects some of that margin and inventory pressure. Even so, the technicals are holding up for now.
Technical Take
The stock dropped on the headline release, but buyers stepped in. Only 3% off the all-time highs, the bulls look poised to resume the trend.
However, investors should take caution if the 21-day at $4200 losses support. Even more concern is warranted if the 50-day MA at $4080 is taken out.
This stock is one of the biggest winners over the last 5 years and if the earnings momentum turns bearish, selling could hit the stock.
In Summary
AutoZone has been a long-term winner with impressive share price momentum, but the latest results highlight cracks beneath the surface. With earnings estimates trending lower, margin pressure building, and inventory swelling, investors face more risk chasing the stock near record highs.
The technicals still look supportive in the short term, but if key levels break, momentum could quickly shift. For now, with a Zacks Rank #5 (Strong Sell) and valuation concerns in play, this looks like a name better avoided until the earnings picture improves.
Investors looking at the automotive parts industry should try Advanced Auto Parts (AAP). The stock is a Zacks Rank #3 (Hold) that has been trending higher since its last earnings report which surprised to the upside by 17%.
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AutoZone, Inc. (AZO): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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