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- AZO F4Q25 - Another EPS miss. What happens with the stock?
AZO F4Q25 - Another EPS miss. What happens with the stock?
Cheat Sheets presented by stocktwits
AUTOZONE INC (AZO)
🚗🔧 Leading Auto Parts Retailer & DIY/Commercial Market Leader
Q4 FY2025 Results | Record $18.9B Annual Sales with 8,417 Total Stores
💰 Market Cap: $75.0B | 💵 Free Cash Flow: $1.8B | 🏪 304 New Store Openings (Record)
👨💼 CEO Phil Daniele | 🌍 500 Store Vision by 2028 | 🎯 Commercial Sales $5.2B
$3,969.59
📉 -$151.41 (-3.67%) Today
Current Price
Price Target Scenarios
18-Month Horizon (2026 Targets)
$5,200.00
Bull Case (+31%)
500 Store Vision
Commercial Dominance
📊 Valuation Calculation:
• 2026E EPS: $200.00 × P/E: 26x = $5,200.00
🚀 Key Assumptions:
Path to 500 stores by 2028 accelerates • Commercial sales hit 15%+ growth • LIFO headwinds reverse • Mexico expansion delivers scale
$4,650.00
Base Case (+17%)
Steady Execution
Store Growth
📊 Valuation Calculation:
• 2026E EPS: $180.00 × P/E: 25x = $4,650.00
⚖️ Key Assumptions:
325-350 store growth continues • Commercial growth 8-10% • LIFO charges moderate • International steady expansion
$3,200.00
Bear Case (-19%)
LIFO Pressure
Demand Destruction
📊 Valuation Calculation:
• 2026E EPS: $145.00 × P/E: 22x = $3,200.00
🔻 Key Assumptions:
LIFO charges reach $500M+ annually • Severe price elasticity emerges • Store expansion slows dramatically • Prolonged tariff-driven demand destruction
Bottom Line for Retail Investors
🏪
Record Growth
304 new stores in FY2025 (most since 1996), targeting 500 stores by 2028
📈
Commercial Acceleration
Q4 commercial sales +12.5%, reaching $5.2B annually with 133 Mega-Hubs
💰
Strong Fundamentals
$18.9B annual sales, $1.8B free cash flow, aggressive share buybacks continue
⚠️
LIFO Headwinds
$80M Q4 LIFO charge, expecting $120M Q1 with tariff-driven cost inflation
📈 Q4 FY2025 "Record Store Growth" Results
Strong Commercial Momentum Despite LIFO Headwinds and Currency Impact
💵
$6.2B
Q4 Revenue
+6.9% (16wk basis)
📈
$48.71
Q4 EPS
+1.3% (16wk basis)
💰
$1.8B
Annual FCF
Strong Generation
🏪
304
New Stores
Record Since 1996
📞 Key Q4 FY2025 Earnings Call Insights
🚀
Commercial Surge
Q4 commercial +12.5% (16wk), accelerating from 10.7% Q3, 7.3% Q2
🏗️
Mega-Hub Expansion
133 Mega-Hubs (+14 in Q4), targeting 25-30 openings in FY26, eventual 300 total
🌍
International Growth
109 international stores opened (record), 1,030 total, +7.2% same-store sales (CC)
🎯
500 Store Vision
Targeting ~500 stores annually by 2028 (300 US, 200 international)
📍 Strategic Theme: "Driving the Future Together" - FY26 focus on collaboration and customer education on expanded product offerings
💰 LIFO Impact: $80M Q4 charge, expecting $120M Q1 and $80-85M per quarter thereafter due to tariff-driven cost inflation
🔮 FY26 Outlook: 325-350 new stores planned, $1.5B CapEx, accelerated back-half weighting, mid-single-digit SG&A growth
📊 Q4 FY2025 Performance & Key Metrics
| Metric | Q4 FY2025 | Performance |
|---|---|---|
| Domestic SSS | +4.8% | Strong Acceleration |
| DIY Comp | +2.2% | Solid Growth |
| Commercial Growth | +12.5% | Accelerating Momentum |
| Share Repurchases | $447M | Strong Capital Returns |
Annual Sales$18.9B
Weekly Sales/Store$48K
🎯 FY2026 Strategic Priorities & Investment Focus
"We are excited about our growth prospects for the new year behind a resilient DIY business, a fast-growing international business, and a domestic commercial business that is growing share in a meaningful way. This is a marathon and not a sprint." - CEO Phil Daniele
🚀 Why AZO Bulls Are Right
🏗️
Massive Expansion
500 stores annually by 2028 vision, most aggressive growth since 1996
📈
Commercial Acceleration
Q4 +12.5% growth, 133 Mega-Hubs driving market share gains
🌍
Mexico Opportunity
Record 109 international stores, older car park, fragmented competition
💎
Price Inelasticity
Break-fix nature, $35-40 DIY tickets, industry rational pricing for 30+ years
🐻 Why AZO Bears Have Valid Concerns
📊
LIFO Headwinds
$80M Q4 charge, expecting $400M+ annual impact from tariff-driven inflation
💸
SG&A Pressure
Mid-single-digit SG&A growth, new store drag in early years requiring comp acceleration
⚡
Demand Risk
Potential price elasticity emergence if tariff inflation exceeds mid-single digits
🎯
Execution Risk
Aggressive 500-store annual goal requires flawless execution and market expansion
This analysis is for informational purposes only and should not be considered investment advice. Please consult with a financial advisor before making investment decisions.
