Is It Too Late To Consider AutoZone After Strong Long Term Share Price Gains

• Wondering if AutoZone is still a good buy after its massive long term run, or if the easy money has already been made? This breakdown will help you decide whether the current price makes sense.
• Despite some short term noise, with the stock down about 3.1% over the last week, AutoZone is still up 4.1% over the past month, 17.7% year to date and an impressive 249.2% over five years. This naturally raises questions about how much upside is left from here.
• Recent headlines have focused on AutoZone's continued store expansion, investments in supply chain efficiency and its ongoing share repurchase program. All of these help explain why the market has rewarded the stock over time. At the same time, competition from online players and evolving trends in vehicle ownership are keeping risk perceptions and expectations in flux.
• On our numbers AutoZone currently scores just 1 out of 6 on our valuation checks, suggesting it only looks undervalued on one metric. Next we will walk through the main valuation approaches investors are using today and then finish with a more comprehensive way to think about the stock's true worth.

AutoZone scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: AutoZone Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a business is worth today by projecting its future cash flows and discounting them back to the present. For AutoZone, the model used is a 2 Stage Free Cash Flow to Equity approach, based on cash that could theoretically be returned to shareholders.

AutoZone generated about $2.0 billion in free cash flow over the last twelve months. Analysts and internal estimates project this to rise gradually, reaching around $3.3 billion in free cash flow by 2030, with further growth into the next decade as illustrated by the ten year projections. Early years are anchored in analyst forecasts. Later years are extrapolated by Simply Wall St using more moderate growth assumptions.

When these projected cash flows are discounted back to today, the model arrives at an intrinsic value of roughly $3,278 per share. With the DCF implying the stock is 16.7% above this estimated fair value, AutoZone currently screens as overvalued on this metric.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests AutoZone may be overvalued by 16.7%. Discover 928 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for AutoZone.

Approach 2: AutoZone Price vs Earnings

For consistently profitable businesses like AutoZone, the price to earnings (PE) ratio is a straightforward way to gauge how much investors are willing to pay for each dollar of current earnings. In general, companies with stronger growth prospects and lower perceived risk tend to justify higher PE ratios, while slower growth or higher uncertainty should translate into a lower, more conservative multiple.

AutoZone currently trades at about 25.5x earnings. That is above the broader Specialty Retail industry average of roughly 17.9x, but still below the peer group average of around 35.6x. To refine this comparison, Simply Wall St uses a proprietary Fair Ratio, which estimates what a reasonable PE should be after factoring in the company’s earnings growth, industry positioning, profit margins, market cap and specific risks.

This Fair Ratio for AutoZone is 19.9x, which is more tailored than a simple peer or industry comparison because it explicitly adjusts for growth, risk and profitability rather than assuming all retailers deserve similar multiples. With the current PE of 25.5x sitting meaningfully above the 19.9x Fair Ratio, the stock screens as expensive on this metric.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1439 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your AutoZone Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, where you turn your view of AutoZone’s business into a simple story that links what you believe about its future revenue, earnings and margins to a financial forecast and then to a fair value estimate that can be compared directly with today’s share price to help you decide whether to buy, hold or sell.

On Simply Wall St, Narratives live in the Community page and are used by millions of investors as an accessible tool. Narratives automatically keep their story aligned with the latest data, dynamically updating fair value when new information like earnings results, news or guidance arrives so that decisions stay grounded in both fundamentals and real time developments.

For example, one AutoZone Narrative might assume that ongoing store expansion, supply chain investments and steady margins justify a fair value near the top of analyst targets around $4,900. A more cautious Narrative could highlight FX headwinds, tariffs and rising expenses to support a fair value closer to the low end near $2,900. This gives you a clear framework to choose which story best matches your own expectations.

Do you think there's more to the story for AutoZone? Head over to our Community to see what others are saying!

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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