How Does This Auto Parts Retailer Operate?
AutoZone is a retailer focused on automotive replacement parts and related products. It serves customers who need parts for vehicle maintenance and repair, selling through a large store footprint and supporting channels. The business is built around product availability and repeat purchase behavior tied to ongoing vehicle upkeep. Its scale is reflected in a market value of about USD 59.2 billion.
Are Margins and Returns Still Expanding?
FundamentalsFor the year ended August 30, 2025 (reported in USD), revenue reached USD 18.9 billion, with EBIT of USD 3.6 billion and net income of USD 2.5 billion. That operating result sits alongside TTM margins of 51.88% gross and 18.08% operating, translating into a 12.47% net profit margin.
Cash generation, using the provided proxy that adjusts EBIT for tax, adds depreciation and amortization, and subtracts capital expenditure, was about USD 2.26 billion, with depreciation and amortization at USD 613.2 million against capex of USD 1.33 billion. Revenue grew 2.4% year over year, while the TTM ROE of 249.27% stands out as an unusually high equity return measure in the context of these profit levels. Total debt was USD 8.8 billion.
Is the Stock Fairly Priced Now?
DCF / MultiplesAt USD 3,594.08, the shares trade within the DCF range, which runs from USD 2,241.13 in a weaker scenario to USD 4,007.67 centrally and USD 6,402.15 in a stronger outcome. The pricing also lines up with headline multiples of 24.19x trailing earnings and 16.17x EV/EBITDA.
High Returns Require Stability
TakeawayOperations are producing high margins and very high equity returns. The valuation sits near the middle of the cash-flow range. This works if margins and cash generation stay consistent. It breaks if returns fade or reinvestment costs rise faster than profit.