AutoZone (AZO) Valuation in Focus After Recent Share Price Momentum

AutoZone (AZO) finished the day up 1.2% with its stock showing gains over the past week, despite a small pullback over the past month. Investors may be watching for signals on future performance in light of the recent momentum.

See our latest analysis for AutoZone.

Shares are now trading at $3,897.88. While there has been a modest dip over the past month, the longer-term trend for AutoZone has been strong. The stock boasts a year-to-date share price return of nearly 20% and a one-year total shareholder return just over 25%. That kind of momentum signals investors still see growth potential, especially compared to the broader market.

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But with shares trading not far below analyst targets and solid growth already reflected in the numbers, investors have to ask: does AutoZone offer real upside from here, or has the market already priced in its best days?

Most Popular Narrative: 15% Undervalued

With the most widely followed narrative placing AutoZone’s fair value at $4,583, well above the last close price of $3,897.88, the market appears to be overlooking factors that could drive further upside. This sets the scene for a closer look at what is underpinning the bulls’ case.

“Expansion of Mega-Hub locations and international stores is expected to drive revenue growth and improve sales margins by enhancing inventory availability. Investments in advanced technology for distribution centers aim to improve supply chain efficiencies and net margins, while share buybacks enhance earnings per share.”

Read the complete narrative.

Want to know the growth blueprint fueling this optimistic view? The numbers behind this fair value are powered by analyst projections of earnings, margins and ambitious expansion. Which bold financial assumptions justify such a premium? Dive in to see what is driving this compelling narrative.

Result: Fair Value of $4,583 (UNDERVALUED)

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

However, ongoing margin pressures and exposure to foreign exchange swings could challenge expectations and shift the outlook if these factors are not managed carefully.

Find out about the key risks to this AutoZone narrative.

Another View: Looking at Valuation Multiples

While analysts point to upside using earnings forecasts, a second angle compares AutoZone’s price-to-earnings ratio with peers. At 26x, AutoZone trades well above the US Specialty Retail industry average of 17.5x and even its fair ratio of 19x. This premium signals investors are already paying up for possible future growth, which may leave less room for error if momentum slows. Is the market’s optimism justified, or does it raise the risk of disappointment?

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

Build Your Own AutoZone Narrative

If you’d rather dig into the metrics yourself or craft an alternative perspective, you can quickly develop your own view in just a few 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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