AutoZone Navigates Growth During Tariff Pressures

Author: Nabaparna Bhattacharya | September 24, 2025 02:14pm

AutoZone, Inc. (NYSE:AZO) shares are trading higher on Wednesday.

The company reported fourth-quarter earnings per share of $48.71, missing the analyst consensus estimate of $50.91. Quarterly sales of $6.242 billion (+0.6% year over year) missed the Street view of $6.245 billion.

AZO is building positive momentum. See the full breakdown here.

BofA Securities analyst Robert F. Ohmes reiterated the Buy rating on AutoZone with a price target of $4,800.

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Ohmes said gross margin fell 98 bps to 51.5%, mainly from a 128 bps LIFO hit tied to an $80 million non-cash charge and only partly offset by better merchandise margins.

The analyst said tariff-driven cost inflation is weighing on margins and expects LIFO headwinds to persist ($120 million in the first quarter and $80–$85 million per quarter for the rest of 2026), even as management aims to hold the margin rate over time.

Ohmes added that a larger commercial mix could keep pressure that merchandise margin gains may offset, and the analyst now models a 250 bps drop to 50.5% in the first quarter.

The analyst believes accelerated investments should help the company lift Pro-segment share above the current 5%.

Ohmes models first quarter SG&A deleverage to 33.5% and SG&A per store up 4.8%, noting new locations typically mature over 4 to 5 years and stores opened in the second half of 2025 could pressure SG&A in the first half of 2026.

The analyst said he remains confident in AutoZone’s recession-resilient track record, share gains in DIY and Pro, potential pricing tailwinds from inflation, a more favorable used-versus-new vehicle mix and continued Pro momentum from maturing commercial programs and the rollout of hubs and megahubs.

Based on fiscal fourth-quarter results, he cut his EPS estimates for fiscal 2026 to $152.93 from $166.90.

AZO Price Action: AutoZone shares are trading higher by 2.62% to $4,228 at publication on Wednesday.

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