AutoZone remains a Buy as valuation improves despite slower margin recovery and 31% stock drop.

AutoZone is still rated a Buy due to its attractive valuation and moderate earnings growth, despite a 31% stock decline over the past year. Revenue growth exceeded expectations with commercial sales up 10% and store count surpassing 8,000, but margin normalization and return on invested capital lagged earlier assumptions. The normalization of LIFO expenses has improved earnings per share visibility, and upcoming Q4 results will depend on merchandise margin, SG&A leverage, commercial growth, and DIY traffic trends. At its current price, AutoZone trades at 16 times its FY2027 earnings per share, offering a better risk/reward profile than last year.