AutoZone beat fiscal fourth-quarter profit expectations, earning $56.05 a share against Wall Street’s $54.08 estimate.
Net income rose to $931.6M from $837M a year earlier in the quarter ended Aug. 29, while revenue grew 5.6% to $6.59B, missing the $6.7B consensus.
Shares rose Tuesday following the results, with O’Reilly Automotive and Advance Auto Parts also gaining.
Margins carried the quarter
Gross margin expanded 182 basis points to 53.3%, helped by tariff refunds and a non-cash LIFO benefit, while operating profit climbed 10.1% to $1.3B.
Same-store sales increased just 1.5% on a constant-currency basis, well below Wall Street’s 3.8% forecast. The earnings beat came despite weaker-than-expected sales growth, with margin gains doing much of the work.
Domestic commercial sales, which serve repair garages and professional customers, grew 8.6% to $1.9B, outpacing the company’s overall revenue growth.
AutoZone expanded its footprint to 8K stores across the US, Mexico, and Brazil, up from roughly 7.7K a year earlier. It added 374 locations during fiscal 2026, with 175 opening in the final quarter.
Full-year revenue reached $20.3B, up 7.4%, while diluted earnings came in at $152.55 a share. The retailer also spent $697.5M repurchasing 223K shares in the fourth quarter, bringing annual buybacks to $2B.
Management is promising acceleration
CEO Phil Daniele said AutoZone faced a difficult selling environment during the first eight weeks of the quarter before business improved.
Management expects growth to accelerate across every region in the year ahead, although CFO Jamere Jackson acknowledged that transaction volumes remain soft as customers contend with high inflation.
Revenue missed consensus in all four quarters of fiscal 2026, leaving management with a sales recovery to deliver despite the stronger earnings.
Evercore ISI lowered its price target to $3.5K from $3.7K, while Barclays maintained its Buy rating. The consensus mean target stands near $3.9K.
The next test comes with fiscal first-quarter results in November, when analysts expect earnings of $37.77 a share on $4.99B in revenue.
A one-time tariff refund added 145 basis points to fourth-quarter gross margin, leaving AutoZone more dependent on stronger sales at existing stores to sustain profit growth without that benefit.
