A Look at AutoZone’s (AZO) Valuation Following New $1.5 Billion Share Buyback Approval

AutoZone (AZO) is making headlines after its Board of Directors approved an additional $1.5 billion for the company's ongoing share buyback program. This move signals management's continued confidence in AutoZone's financial foundation and approach to rewarding shareholders.

See our latest analysis for AutoZone.

AutoZone’s $1.5 billion buyback expansion comes as the stock rides a noticeable upward trend, with a year-to-date share price return of over 25% and a 1-year total shareholder return of 30%. These results comfortably outpace many industry peers. Recent events, including leadership changes and news from the broader auto supply chain, have not slowed momentum and suggest that investors remain optimistic about both the company’s capital returns and operational resilience.

If the latest buyback news has you looking for what else is steering the auto retail space, it’s a great opportunity to discover See the full list for free.

But with shares trading near all-time highs and recent earnings estimates revised lower, investors may wonder whether AutoZone’s value is already fully reflected. They may also question if there is still a buying opportunity as the market weighs future growth.

Most Popular Narrative: 10.6% Undervalued

With AutoZone’s fair value pegged at $4,556 according to the most widely followed narrative, the latest closing price of $4,075 signals a notable disconnect. This contrast sets the stage for a deeper look at what’s driving bullish expectations.

The expansion of Mega-Hub locations, with an aim to open at least 19 more in the next two quarters, will enhance inventory availability and support both retail and Commercial growth, potentially improving sales and operating margins.

Read the complete narrative.

Curious about what’s fueling analysts’ optimistic outlook? The foundation of this narrative is a unique blend of operational expansion and financial strategy. Discover the bold revenue ambitions and future profit assumptions that make this undervaluation compelling. There is a surprising financial formula behind the headline numbers.

Result: Fair Value of $4,556 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent inflation and regional sales volatility remain key risks. These factors could challenge the upbeat case if they start to impact growth rates.

Find out about the key risks to this AutoZone narrative.

Another View: Market Ratios Paint a Different Picture

While narrative-driven fair value points to AutoZone being undervalued, its price-to-earnings ratio of 27.2x stands far above the U.S. Specialty Retail industry average of 16.7x and above the “fair ratio” of 19.2x derived from deeper analysis. This premium suggests the market is factoring in high expectations. Is this an opportunity, or a warning sign?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own AutoZone Narrative

Prefer to chart your own course? With all the data at your fingertips, you can test your perspective and build a narrative in just minutes. Do it your way

A great starting point for your AutoZone research is our analysis highlighting 1 key reward and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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