AutoZone (AZO) Stock Forecast & Price Target

AutoZone has demonstrated strong sales performance, with early quarter figures showing an 8.8% increase, driven by colder weather leading to greater demand for failure-related automotive parts, while subsequent periods recorded growth rates of 5.9% and 7.1%. The domestic Commercial/DIFM segment has also performed well, achieving a sales growth of 7.3%, supported by steady like-for-like same-store SKU inflation and an average ticket increase of 0.5%. Furthermore, improvements in inventory management and high in-stock levels have contributed to a notable rise in commercial comp sales, which increased approximately 6.8%, indicating potential for continued growth moving forward.

AutoZone's recent financial performance indicated a negative outlook, as the firm's F2Q results fell short of consensus expectations on both revenue and earnings, attributed to foreign exchange (FX) headwinds and adverse weather conditions impacting sales. The domestic DIY comparable sales remained nearly flat year-over-year at 0.1%, significantly below the anticipated growth of 2.2%, while international performance also suffered, with USD International comps declining 8.2%, far below the expected rate. Additionally, increased operating expenses led to a decline in operating margins to 19.7%, a reduction of 80 basis points year-over-year, and resulted in a lowered EPS forecast for FY26, reflecting persistent challenges from FX impacts and rising SG&A costs.