AutoZone (AZO) Stock Forecast & Price Target

AutoZone demonstrates robust revenue growth, with net sales increasing by 4.8% and a significant 7.3% rise in the Domestic Commercial/DIFM segment, driven by both inflation in same-store SKUs and growth in average ticket size. The company's strategic investments in inventory management and infrastructure are yielding positive results, as reflected in improved fill rates and high in-stock levels, contributing to a notable acceleration in domestic commercial comp sales to approximately 6.8%. Furthermore, the early quarter sales performance of 8.8% suggests a strong consumer demand spurred by seasonal changes, indicating a positive trajectory for future sales growth.

AutoZone's recent financial performance has shown signs of weakness, with F2Q results falling short of consensus expectations on both revenue and earnings due to adverse foreign exchange (FX) impacts and unusually snowy weather affecting sales. The company's domestic do-it-yourself (DIY) comparable sales remained stagnant year-over-year, and international sales were further pressured by a substantial drop in the value of the Mexican Peso, leading to significant declines in overall performance metrics. Furthermore, increased operating expenses have negatively impacted profit margins, with the operating margin decreasing to 19.7%, reflecting a broader trend of escalating costs and unfavorable currency fluctuations that have necessitated a downward revision of the company's earnings per share forecast for FY26.