AutoZone currently trades at $4,199 and has been a dream stock for shareholders. It’s returned 236% since September 2020, nearly tripling the S&P 500’s 80.3% gain. The company has also beaten the index over the past six months as its stock price is up 20.7%.

Following the strength, is AZO a buy right now? Or is the market overestimating its value? Find out in our full research report, it’s free.

Why Are We Positive On AutoZone?

Aiming to be a one-stop shop for the DIY customer, AutoZone (NYSE: AZO) is an auto parts and accessories retailer that sells everything from car batteries to windshield wiper fluid to brake pads.

1. New Stores Popping Up Gradually, Supports Growth

A retailer’s store count often determines how much revenue it can generate.

AutoZone sported 7,516 locations in the latest quarter. Over the last two years, it has opened new stores quickly, averaging 3% annual growth. This was faster than the broader consumer retail sector.

When a retailer opens new stores, it usually means it’s investing for growth because demand is greater than supply, especially in areas where consumers may not have a store within reasonable driving distance.

2. Elite Gross Margin Powers Best-In-Class Business Model

Gross profit margins are an important measure of a retailer’s pricing power, product differentiation, and negotiating leverage.

AutoZone has best-in-class unit economics for a retailer, enabling it to invest in areas such as marketing and talent. As you can see below, it averaged an elite 51.8% gross margin over the last two years. That means AutoZone only paid its suppliers $48.24 for every $100 in revenue.

3. Excellent Free Cash Flow Margin Boosts Reinvestment Potential

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

AutoZone has shown terrific cash profitability, driven by its lucrative business model that enables it to reinvest, return capital to investors, and stay ahead of the competition. The company’s free cash flow margin was among the best in the consumer retail sector, averaging 10.6% over the last two years.

Final Judgment

These are just a few reasons why we think AutoZone is a great business, and with its shares beating the market recently, the stock trades at 25.4× forward P/E (or $4,199 per share). Is now the right time to buy? See for yourself in our in-depth research report, it’s free.

Stocks We Like Even More Than AutoZone

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.

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