AUTOZONE INC (AZO) Stock Analysis
AUTOZONE INC (AZO) Stock Analysis
Analysis from 10-Q filed 2025-12-19. Data as of Q1 2026.
Overall Grade: F (Concerning)
AUTOZONE INC faces challenges in financial performance that warrant careful analysis.
| Metric | Value | Context |
|---|---|---|
| ROIC | 30.7% | Above industry average |
| FCF Margin | 8.2% | Healthy cash flow |
| Debt/Equity | -3.1x | Conservative leverage |
Investment Thesis: Strong return on invested capital of 30.7% suggests durable competitive advantages and efficient capital allocation.
Explore AUTOZONE INC: Earnings History | Filing Intelligence | ROIC Analysis
Profitability: AUTOZONE INC earns 30.7% ROIC, Top 5% in Consumer Discretionary
AUTOZONE INC's trailing-twelve-month ROIC of 30.7% ranks Top 5% in Consumer Discretionary companies (sector median: 8.8%), driven by NOPAT margin of 14.4% combined with asset turnover of 1.0x. Source: 10-Q filed 2025-12-19. Gross margin of 51.9% with operating margin at 18.1% reflects strong pricing power.
| Metric | AZO | Rating | Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 30.7% | Excellent | Above sector median of 8.8% |
| Return on Equity (ROE) | -68.4% | Red flag | Moderate equity returns |
| Gross Margin | 51.9% | Excellent | Strong pricing power |
| Operating Margin | 18.1% | Good | Efficient operations |
Cash Flow: AUTOZONE INC generates $1.6B FCF at 8.2% margin, positive NaN/8 quarters
AUTOZONE INC generated $1.6B in free cash flow (TTM), a 8.2% FCF margin, a margin that ranks Top 25% in Consumer Discretionary. Operating cash flow exceeds net income by 1.2x, indicating high earnings quality. FCF was positive in N/A of the last 8 quarters. Source: 10-Q filed 2025-12-19.
| Metric | AZO | Rating | Context |
|---|---|---|---|
| Free Cash Flow Margin | 8.2% | Adequate | Healthy cash generation |
| Free Cash Flow (TTM) | $1.6B | Good | Positive cash generation |
| OCF/Net Income | 1.2x | Excellent | High earnings quality |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
Balance Sheet: AUTOZONE INC at -3.1x leverage
AUTOZONE INC's debt-to-equity ratio of -3.1x reflects conservative leverage. Total debt of $8.9B offset by $285.5M in cash. Source: 10-Q filed 2025-12-19.
| Metric | AZO | Rating | Context |
|---|---|---|---|
| Debt to Equity | -3.1x | Excellent | Conservative capital structure |
| Net Cash Position | $-8.6B | Warning | Net debt position |
Valuation: AUTOZONE INC trades at 26.3x earnings
AUTOZONE INC trades at a P/E of 26.3x. Free cash flow yield of 2.5% reflects market expectations for growth.
| Metric | AZO | Rating | Context |
|---|---|---|---|
| P/E Ratio | 26.3x | Adequate | Premium valuation |
| EV/Sales | 3.7x | Good | Growth premium priced in |
| FCF Yield | 2.5% | Adequate | Lower cash yield |
Capital Allocation: AUTOZONE INC returns 2.3% shareholder yield
AUTOZONE INC's total shareholder yield is 2.3% (dividends + buybacks 2.3%). Source: 10-Q filed 2025-12-19.
| Metric | AZO | Rating | Context |
|---|---|---|---|
| Total Shareholder Yield | 2.3% | Adequate | Dividend + buyback yield combined |
| Buyback Yield | 2.3% | Adequate | Active share repurchases |
| Total Capital Returned (TTM) | $1.5B | Good | Dividends + buybacks returned to shareholders |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 30.7% | Top 5% | 3.5x above |
| Free Cash Flow Margin | 8.2% | Top 25% | 3.0x above |
| Gross Margin | 51.9% | Top 50% | 1.3x above |
| Operating Margin | 18.1% | Top 10% | 3.9x above |
| Return on Equity (ROE) | -68.4% | Top 5% | -6.4x below |
| P/E Ratio | 26.3x | N/A | - |
Financial Scorecard
| Metric | AZO | Rating | Sector Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 30.7% | Excellent | Top 5% of sector (median: 8.8%) |
| Free Cash Flow Margin | 8.2% | Adequate | Top 25% of sector (median: 2.7%) |
| Gross Margin | 51.9% | Excellent | Top 50% of sector (median: 39.5%) |
| Debt to Equity Ratio | -306.2% | Excellent | Conservative capital structure |
| P/E Ratio (Price-to-Earnings) | 26.3x | Adequate | Growth premium |
| Free Cash Flow Yield | 2.5% | Warning | Growth-focused valuation |
Frequently Asked Questions
Q: What is AUTOZONE INC's Return on Invested Capital (ROIC)?
AUTOZONE INC (AZO) has a trailing twelve-month Return on Invested Capital (ROIC) of 30.7%. This compares above the sector median of 8.8%. An ROIC above 20% indicates exceptional capital efficiency and strong competitive advantages.
Q: What is AUTOZONE INC's Free Cash Flow Margin?
AUTOZONE INC (AZO) has a free cash flow margin of 8.2%, generating $1.6 billion in free cash flow over the trailing twelve months. A FCF margin between 5-10% is typical for capital-intensive businesses.
Q: Is AUTOZONE INC stock overvalued or undervalued?
AUTOZONE INC (AZO) trades at a P/E ratio of 26.3x, which is above the sector median of N/A. The EV/Sales multiple is 3.7x. Free cash flow yield is 2.5%, reflecting growth expectations priced into the stock.
Q: What is AUTOZONE INC's revenue and earnings growth?
AUTOZONE INC (AZO) grew revenue by 5.0% year-over-year. Earnings per share decreased by 4.2% compared to the prior year. Modest growth indicates a mature business with stable demand.
Q: Is AUTOZONE INC buying back stock?
AUTOZONE INC (AZO) repurchased $1.5 billion of stock over the trailing twelve months. This represents a buyback yield of 2.3%.
Q: How does AUTOZONE INC compare to competitors in Consumer Discretionary?
Compared to other companies in Consumer Discretionary, AUTOZONE INC (AZO) shows: ROIC of 30.7% is above the sector median of 8.8% (Top 1%). FCF margin of 8.2% exceeds the sector median of 2.7% (Top 21% of sector). Gross margin at 51.9% is 12.3 percentage points higher than sector peers. These rankings are based on MetricDuck's analysis of all Consumer Discretionary companies with available SEC filings.
Q: What warning signs should I watch for with AUTOZONE INC?
Investors in AUTOZONE INC (AZO) should monitor these potential warning signs: 1) ROIC has been declining, potentially signaling deteriorating competitive position. Regular monitoring of SEC filings and quarterly trends is recommended.
Data Source: Data sourced from 10-Q filed 2025-12-19. TTM metrics as of Q1 2026.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
Scope: This analysis covers SEC filing fundamentals — profitability, cash flow, balance sheet, and valuation metrics. For analyst estimates and price targets, consult sell-side research.
This analysis is for informational purposes only and does not constitute investment advice.