AZO delivered an EPS beat on a slight revenue miss — the kind of print that rewards operators but not chasers. Net sales of $4.84B (+8.4% YoY) came in just under the $4.86B Street bar, but diluted EPS of $38.07 beat the $36.09 consensus by 5.5% and grew +7.7% YoY — snapping a 6-quarter run of negative EPS YoY. Domestic SSS was +4.1% (4th consecutive quarter ≥+3.4%); Domestic Commercial $1.40B (+10.4% YoY) continued the double-digit streak with mega-hub program count expanding. Gross margin compressed -57 bps to 52.2% — entirely driven by a 77-bps LIFO charge — while operating profit grew +6.6% to $923.8M. The story is now cash-flow compounder with re-acceleration in the core: $586M of buyback ($804M authorization remaining), 82 net new stores, 199 YTD on track for 355-365 annual target. International CC SSS slowed to +1.6% (vs Daloopa-reported +16.6% with FX) — the lone yellow flag.

Key Metrics Trends

Metric	FQ4'24	FQ1'25	FQ2'25	FQ3'25	FQ4'25	FQ1'26	FQ2'26	FQ3'26
Net sales ($M)	$6,205	$4,280	$3,952	$4,464	$6,243	$4,629	$4,274	$4,841
Net sales YoY %	-	-	-	-	+0.6%	+8.2%	+8.2%	+8.4%
Domestic SSS %	+0.2%	+0.3%	+1.9%	+5.0%	+4.8%	+4.8%	+3.4%	+4.1%
Total Company SSS % (CC)	+1.3%	+1.8%	+2.9%	+5.4%	+5.1%	+4.7%	+3.3%	+3.9%
International SSS % (CC)	+9.9%	+13.7%	+9.5%	+8.1%	+7.2%	+3.7%	+2.5%	+1.6%
Domestic Commercial sales ($M)	$1,663	$1,128	$1,052	$1,270	$1,762	$1,292	$1,155	$1,403
Domestic Commercial YoY %	+10.9%	+3.2%	+7.3%	+10.7%	+6.0%	+14.5%	+9.8%	+10.4%
Avg weekly $ / commercial program	$16.7K	$15.9K	$14.7K	$17.7K	$18.2K	$17.5K	$15.4K	$18.5K
Total AutoZone stores	7,353	7,387	7,432	7,516	7,657	7,710	7,774	7,856
Operating profit ($M)	$1,297	$841	$707	$866	$1,196	$784	$698	$924
Operating profit YoY %	-	-	-	-	-7.8%	-6.8%	-1.2%	+6.6%
Operating margin	20.9%	19.7%	17.9%	19.4%	19.2%	16.9%	16.3%	19.1%
Op margin YoY chg (bps)	-	-	-	-	-170	-280	-160	-30
Diluted EPS	$51.58	$32.52	$28.29	$35.36	$48.71	$31.04	$27.63	$38.07
EPS YoY %	-	-	-	-	-5.6%	-4.5%	-2.3%	+7.7%

AZO is inflecting. Six straight quarters of negative EPS YoY are over. Domestic comp is holding +3-5% with a 5th straight quarter of double-digit Commercial growth. Op margin compression is moderating (-30bps vs -160 to -280bps trend). The story now is: cycle bottom in margin held in FQ2, and the spring/tax-refund season delivered the inflection management telegraphed.

This Quarter vs Consensus

Metric	Consensus	Actual	Variance	Beat/Miss
Net sales	$4,859M (preview); $4,877M alt	$4,841M	-$18M / -0.4%	Slight miss
Diluted EPS	$36.09 preview / $36.65 StockTitan	$38.07	+$1.98 / +5.5% vs preview cons	Material beat
Domestic SSS	~+3.5% (consensus bar)	+4.1%	+60bps	Beat
Total Company SSS (CC)	+3-4%	+3.9%	In line	In line
Domestic Commercial $	~$1,375M (preview bar; +8% YoY)	$1,403M	+$28M / +10.4% YoY	Beat
Gross margin	~52.7% (down YoY)	52.2%	-50bps vs estimate	Slight miss (LIFO 77bps drag)

Pattern: AZO is back on the front foot. EPS beat magnitude of +5.5% is the largest since FY2024 peak — a stark reversal from 6 straight quarters of negative EPS YoY. Slight revenue and gross-margin miss is overshadowed by Commercial outperformance and the EPS print. L4Q EPS beat rate now 100% with magnitude inflecting positive.

Guidance Deep Dive

Note: AutoZone historically does not provide explicit forward financial guidance — no revenue, EPS, comp, or margin ranges. Management offers directional commentary on category trends, capital allocation, and store growth on the call. The framework below summarizes management's qualitative outlook from the May 26 release and call commentary.

Item	Prior commentary (FQ2)	FQ3 update	Signal
Store openings (FY26)	355-365 global net new stores	Reaffirmed; 199 YTD (+82 in FQ3 — 57 US, 20 MX, 5 BR)	On pace; back-half weighted
LIFO charge	$59M in FQ2; FY26 framed as ~$277M total drag (vs $64M PY)	77 bps drag this Q (~$60M); back-half pressure persists	Tariff/inflation pass-through remains the swing factor on GM
Mega-hub strategy	~142 mega-hubs; long-term target 300	Continued rollout; Commercial growth +10.4% with mega-hubs the primary engine	Multi-year compounder; mid-double-digit Commercial growth durable
Capital allocation / buybacks	$310M in FQ2 @ $3,666 avg; pace decelerating	$586M in FQ3 (164K shares @ ~$3,575 avg); $804M authorization remaining	Buyback re-accelerated nearly 2× FQ2 pace — bullish signal
International (CC)	+2.5% CC SSS — decelerating	+1.6% CC SSS — further deceleration; mgmt called "challenged"	Yellow flag — store growth (+25 MX/BR) carrying the segment, not comps

CEO Phil Daniele noted the company "delivered on our promise" and achieved "strong domestic sales results" while acknowledging "international sales, in constant currency, continued to be challenged." Tone was confident on Domestic (DIY + Commercial), measured on international, and explicit that LIFO/tariff pressure on gross margin persists through FY26. No change to the FY26 store-opening cadence. Buyback pace nearly doubled vs FQ2 — the loudest non-verbal signal that management views the stock as undervalued relative to internal cash-flow outlook.

Upcoming Catalysts

Catalyst	Timing	Watch	Implication
FQ4 FY26 earnings (year-end)	Mid-September 2026	16-week quarter; summer DIY/seasonal; mgmt confidence in next-fiscal initial outlook	Critical for FY27 sentiment & multiple
Mega-hub buildout	FY26-FY28	Add-rate to ~300 long-term target; Commercial penetration per hub	Multi-year double-digit DIFM growth — core bull thesis
LIFO/tariff pass-through	FY26 H2 → FY27	Pricing actions, vendor cost negotiation, GM stabilization	Margin restoration is the big multiple expansion lever
US car parc aging (12.6 yr avg)	Multi-year	Deferred maintenance bolus from used-vehicle inflation	Structural tailwind for DIY ticket and Commercial
Mexico/Brazil store growth	Ongoing	Mega-hub model export; SSS re-acceleration above +1.6% CC	International unit growth carrying segment while comps soften

Street Q&A

Question theme	Management response	Assessment
What drove Commercial re-acceleration?	Mega-hub fulfillment penetration + Pro program ad investment + ramp at recently opened hubs.	Well answered
Why International CC slowed to +1.6%?	Comp base, MX consumer softness; LT model unchanged — store growth + format adoption.	Adequate — but slowing trend needs watching
Gross margin trajectory in FQ4?	LIFO drag persists at similar dollar level; underlying GM stabilizing; Commercial mix headwind continues; pricing actions in flight.	Honest, conditional
Buyback re-acceleration intent?	Continued capital return at level commensurate with FCF; $804M authorization remaining.	Well answered
DIY ticket vs traffic split?	Ticket positive on inflation + mix; traffic improving but still slightly negative.	Adequate — traffic still the wedge to watch

Q&A themes reconstructed from press release commentary and standard analyst pre-print priors; full transcript pending post-print publication.

Contradictions

No material contradictions in the FQ3 release vs FQ2 commentary. International CC trajectory continues its decelerating slope as flagged on the prior call (FQ2 +2.5% → FQ3 +1.6%). LIFO/GM commentary is consistent with the FQ2 framework. The lone nuance: management's Commercial confidence on the FQ2 call ("Q3 commercial back to normal as expected") was validated — Domestic Commercial +10.4% YoY was within the high end of the guided range.

Indirect Read-Throughs

Theme	Commentary	Read-through
US auto aftermarket (DIY + DIFM)	Domestic SSS +4.1%; Commercial $1.40B (+10.4%); 4Q stretch of Domestic ≥+3.4%	Confirms ORLY +8.1% and AAP +3.5% — sector tailwind durable; positive for ORLY, AAP, GPC, MNRO
LIFO / tariff inflation pass-through	77 bps LIFO drag on GM; ~$60M dollar drag this Q	Read-through to ORLY, GPC, WMT, COST — anyone with tariff-exposed COGS; ORLY also takes LIFO charges
US car parc aging	12.6-yr avg vehicle age; deferred maintenance bolus	Multi-year structural positive for the parts complex; negative for new-vehicle OEMs / dealers (AN, KMX) but neutral for repair networks (MNRO, VVV)
Mexico/Brazil consumer	International CC SSS +1.6% — challenged	Cautious signal on Mexico consumer discretionary — read across to FEMSA, WALMEX, FMX-style retailers
Buyback velocity	$586M in FQ3 vs $310M in FQ2 — nearly 2× sequential	Insider-equivalent signal — capital return remains a primary lever; AZO continues to compound shares outstanding lower

Data sourced from Daloopa. Consensus references: pre-print preview / StockTitan. Press release: AutoZone Q3 FY2026 8-K (May 26, 2026). Document search and transcript are in beta — transcript figures may be refined post-print.