Auto parts and accessories retailer AutoZone (NYSE: AZO) met Wall Street’s revenue expectations in Q3 CY2025, but sales were flat year on year at $6.24 billion. Its GAAP profit of $48.71 per share was 3.9% below analysts’ consensus estimates.
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AutoZone (AZO) Q3 CY2025 Highlights:
- Revenue: $6.24 billion vs analyst estimates of $6.24 billion (flat year on year, in line)
- EPS (GAAP): $48.71 vs analyst expectations of $50.68 (3.9% miss)
- Adjusted EBITDA: $1.39 billion vs analyst estimates of $1.44 billion (22.3% margin, 2.9% miss)
- Operating Margin: 19.2%, down from 20.9% in the same quarter last year
- Free Cash Flow Margin: 8.2%, down from 11.7% in the same quarter last year
- Locations: 7,657 at quarter end, up from 7,353 in the same quarter last year
- Same-Store Sales rose 5.1% year on year (0.7% in the same quarter last year)
- Market Capitalization: $68.94 billion
Company Overview
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.
Revenue Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years.
With $18.94 billion in revenue over the past 12 months, AutoZone is one of the larger companies in the consumer retail industry and benefits from a well-known brand that influences purchasing decisions. However, its scale is a double-edged sword because it’s harder to find incremental growth when you’ve penetrated most of the market. To accelerate sales, AutoZone likely needs to optimize its pricing or lean into international expansion.
As you can see below, AutoZone’s 8.1% annualized revenue growth over the last six years (we compare to 2019 to normalize for COVID-19 impacts) was mediocre, but to its credit, it opened new stores and increased sales at existing, established locations.
This quarter, AutoZone’s $6.24 billion of revenue was flat year on year and in line with Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 6.7% over the next 12 months, similar to its six-year rate. We still think its growth trajectory is attractive given its scale and indicates the market sees success for its products.
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Store Performance
Number of Stores
A retailer’s store count influences how much it can sell and how quickly revenue can grow.
AutoZone operated 7,657 locations in the latest quarter. It has opened new stores quickly over the last two years, averaging 3.2% annual growth, 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.
Same-Store Sales
The change in a company's store base only tells one side of the story. The other is the performance of its existing locations and e-commerce sales, which informs management teams whether they should expand or downsize their physical footprints. Same-store sales provides a deeper understanding of this issue because it measures organic growth at brick-and-mortar shops for at least a year.
AutoZone’s demand rose over the last two years and slightly outpaced the industry. On average, the company’s same-store sales have grown by 2.3% per year. This performance suggests its rollout of new stores could be beneficial for shareholders. When a retailer has demand, more locations should help it reach more customers and boost revenue growth.
In the latest quarter, AutoZone’s same-store sales rose 5.1% year on year. This growth was an acceleration from its historical levels, which is always an encouraging sign.
Key Takeaways from AutoZone’s Q3 Results
We struggled to find many positives in these results. Its gross margin missed and its EPS fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 3.4% to $3,970 immediately after reporting.
AutoZone’s earnings report left more to be desired. Let’s look forward to see if this quarter has created an opportunity to buy the stock. If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.
