Is AutoZone’s Buyback Paying Off For Shareholders?
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AutoZone (AZO) stock lost 9.5% over the year to November 4, 2026, while the S&P 500 returned 14.9%. The auto-parts retailer has nonetheless continued to buy back its own stock. Its diluted share count fell in each of fiscal 2024, 2025 and 2026, leaving each remaining share with a larger slice of its profit. So how much of the growth in what each share earns has come from the buyback?
Most Of AutoZone’s Per-Share Growth Came From Fewer Shares
Nearly all of it. AutoZone’s net income grew just 0.6% a year over those three fiscal years, while its diluted earnings per share grew 4.8% a year. With profit barely moving, the smaller share count accounts for the gap between those two rates. The increase was not smooth, however. Earnings per share fell 3.1% in fiscal 2025 before growing again in fiscal 2026.
AutoZone pays no dividend, making the buyback the only cash it returns to shareholders. The company spent $1.88 billion on buybacks in fiscal 2026 after netting out the stock it pays its staff. That amount was equal to 3.5% of its market value at the November 4 close.
How Does AutoZone Pay For Its Buyback?
AutoZone pays for the repurchases mostly with cash from its stores and borrows the rest. The company produced $3.25 billion of cash from operations on $20.3 billion of revenue in fiscal 2026. Domestic sales to commercial customers grew just under 11% for the year. Management credits this commercial growth to better parts availability in its stores, wider Mega Hub coverage and its Duralast brand.
Suppliers also help. At the end of August 2026, AutoZone owed them $8.6 billion against $7.74 billion of inventory. In effect, suppliers, not shareholders, finance the parts on its shelves.
Store building consumes much of that cash. Capital spending was $1.43 billion in fiscal 2026, leaving free cash flow of $1.82 billion. That cash covered about 90% of the full $2.01 billion AutoZone spent buying back stock, before netting out the stock it pays its staff. Borrowing filled the remaining gap of about $0.2 billion. Total debt rose by more than that amount, climbing to $12.9 billion at the end of fiscal 2026 from $12.3 billion a year earlier.
Can AutoZone Keep Buying Back Shares At This Pace?
AutoZone can, but only by bringing in more cash from its stores or by borrowing more, because management plans to spend slightly more on capital projects in fiscal 2027. Management said on the fiscal Q4 2026 call that it plans to invest around $1.65 billion in fiscal 2027.
AutoZone’s net debt equals 2.8 times its fiscal 2026 EBITDA, its earnings before interest, taxes, depreciation and amortization. Operating income covered interest expense 7.7 times, so the interest bill is not a strain today, though more borrowing for the buyback would add to it.
The soft spot is AutoZone’s do-it-yourself (DIY) business. Domestic DIY same-store sales fell 0.6% in fiscal Q4 2026. Management said it sees evidence of DIY customers deferring purchases and trading down, particularly the most financially challenged.
AutoZone’s shareholders still receive more earnings per share from the buyback, but the company paid for part of it with borrowed money in fiscal 2026. Free cash flow against what AutoZone spends on buybacks is the number to watch in its fiscal Q1 2027 report, expected in December 2026. By then Chief Financial Officer Jamere Jackson will have left, effective November 25, and AutoZone has begun an external search for his successor.
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