Table of Contents :
• Stock Rating & Target Price
• Investment Thesis
• Fundamental Models Used
• Company Description
• Corporate Timeline
• Key Metrics (KPI ) and Recently Reported Earnings Review
• Business Highlights, Strategic Announcements & Outlook
• Quarter-over-Quarter (Q-o-Q) and Year-over-Year (Y-o-Y) Growth Analysis
• Key Catalysts Driving Growth
• Historical Financial Statement Analysis & CAGR Trends
• Quarterly Key Financial Ratios and Performance Metrics
• Annual Financial Performance Analysis: Horizontal and Vertical Financial Analysis, Trends
• Financial Forecasts
• Annual Forecasts: Income Statement
• Annual Forecasts: Cash Flow Statements
• Net Debt Levels
• A Closer Look at DCF: Our Assumptions and Methodology
• Terminal Value Calculation
• Target Price Analysis
• Valuation Multiples
• Supplementary Valuation Analysis: Multiples Approach
• Scenario/Sensitivity Analysis – Base Case , Bull Case ,Bear Case
• Holistic Peer Review & Trading Comps: Financial Data, Operational Metrics, and Valuation Multiples
• Implied Price Per Share
• Ownership Activity/ Insider Trades
• Ownership Summary
• An analysis of ESG Risk Rating
• Key Professionals
• Key Board Members
• Key Risks Considerations
• Analyst Ratings
• Analyst Industry Views
• Disclosures
AutoZone’s Commercial Bet Is Paying Off—But Can It Restore Margins?
AutoZone’s Q2 FY25 print highlighted strong execution in the commercial (DIFM) segment, with sales up 7.3% YoY, marking a sharp acceleration from Q1’s 3.2%, while domestic same-store sales rose 1.9% (vs. 1.5% expected). However, topline strength was overshadowed by a $31.73M revenue miss and continued margin compression, as EBIT declined 4.9% YoY, pressured by higher labor, IT investments, and fulfillment costs. Operating margin fell 140 bps to 17.9%, well below our 18.8% forecast, as the company ramped store openings, network expansion, and digital integration. DIY (Retail) stabilized (+0.1% comp), but discretionary weakness and sustained low-income consumer strain remain constraints. FX headwinds (-8.2% reported international comps) and a projected $356M annual revenue drag further complicate the near-term outlook. Strategically, AutoZone is doubling down on DIFM, with 19 new Mega-Hubs and supply chain enhancements expected to strengthen inventory depth and fulfillment agility. While secular tailwinds—aging vehicle fleet (12.6 years), constrained new/used car affordability—support long-term demand, execution on margin recovery will be critical. Can AutoZone’s aggressive commercial push drive sustained revenue growth without further margin erosion, or will rising cost pressures challenge long-term profitability expectations?
