AutoZone (AZO) Stock Forecast & Price Target

AutoZone demonstrates a strong positive outlook due to its robust performance in transaction growth, with a 5.9% increase in same-store transactions reflecting substantial share gains and successful new business initiatives. The domestic Commercial/DIFM segment showed impressive same-store sales growth of over 12%, highlighting the company's ability to capture market share, while DIY sales remained resilient with a 2.2% increase. Additionally, international operations reported a solid 3.7% rise in same-store sales in constant currency, bolstered by favorable foreign exchange impacts that drove reported growth to 11.2%, showcasing the company's effective product mix and strategic positioning across various markets.

AutoZone has revised its FY27 earnings per share (EPS) forecast downward to $185.91, reflecting concerns over elevated selling, general and administrative (SG&A) expenses and a decline in EBIT margin from 19.5% to 18.0%, primarily due to costs associated with new store openings and significant LIFO charges amounting to approximately $360 million. Additionally, the company experienced a 3.4% decline in traffic during the quarter, exacerbated by unfavorable weather conditions and a tough comparison to the previous year’s hurricane impact, resulting in weaker DIY sales performance. The adjustments to both the FY26 and Q2 EPS forecasts indicate expected continued pressure on profitability, with anticipated lower same-store sales growth and an overall reduced margin forecast further contributing to a negative outlook for AutoZone's stock.