Value
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 6.1 |
| P/S | 8.6 |
| EV/EBITDA | 3.0 |
| Fwd P/E | 7.1 |
| PEG | 5.4 |
| Analyst target | 7.5 |
- ▸Forward P/E: 17.6x
- ▸PEG: 1.40
AZO · Why this verdict
Why AutoZone (AZO) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.6/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
A confirmed technical downtrend with a death cross in place and free cash flow converting at only 36% of net income are the dominant near-term headwinds, though the two most recent quarters both beat consensus and 15% headroom to the analyst target with a 2.8-to-1 risk/reward maintains a watchable recovery setup.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The 200-day moving average slope of -2.8% over the past 30 days, combined with a death cross, constitutes a confirmed downtrend that historically precedes further near-term weakness before a durable base can form. Momentum breakdown | The 50-day moving average crosses back above the 200-day moving average within the next 3 months, signaling the downtrend has been broken. | →Stable |
| CounterThe MACD has begun improving from oversold levels with an RSI near 50, and the setup is characterized as early recovery; if the two-quarter earnings improvement persists, the technical picture may resolve quickly without a further significant price decline. | ||
Free cash flow converting at only 36% of net income — flagged as a red flag — means the business is retaining far less cash than reported earnings suggest, raising questions about earnings quality and the durability of the per-share growth story. Quality breakdown | Free cash flow conversion improves above 60% of net income for 2 consecutive quarters, reducing the gap between reported earnings and actual cash generation. | →Stable |
| CounterA strong Piotroski F-Score of 8 out of 9 indicates the business is improving across multiple financial health dimensions simultaneously; the weak cash conversion may reflect a specific working-capital or capital-expenditure cycle rather than a structural impairment. | ||
The two most recent quarters both beat consensus estimates — after two consecutive misses in the prior two periods — suggesting the business may be stabilizing and that the negative earnings narrative captured in the bear case reflects conditions that are beginning to improve. Earnings | EPS surprise remains positive for the next 2 quarterly reports, extending the recovery in earnings delivery to 4 consecutive beats. | →Stable |
| CounterThe prior two misses included a -4.7% and -4.0% negative surprise, and the two recent beats were narrow (5.1% and 0.8%); an average negative surprise across all four quarters of -0.7% means the trailing earnings trend barely nets positive, and the recovery is fragile. | ||
With 15% headroom to the $3,572 analyst consensus target and a risk/reward ratio of approximately 2.8-to-1, the position geometry is attractive for a recovery scenario — the asymmetry rewards patience if the technical and earnings headwinds resolve over the next 12 months. Price targets | Price closes above $3,400 within 12 months as the technical downtrend resolves and the earnings recovery narrative takes hold. | →Stable |
| CounterAn elevated put/call ratio of 1.36 indicates the options market is skewed toward downside hedging; if the options market's skepticism proves correct, the 15% upside headroom could be consumed by the downside before the target is reached. | ||
The 200-day moving average slope of -2.8% over the past 30 days, combined with a death cross, constitutes a confirmed downtrend that historically precedes further near-term weakness before a durable base can form.
→StableMomentum breakdown
- Expectation
- The 50-day moving average crosses back above the 200-day moving average within the next 3 months, signaling the downtrend has been broken.
CounterThe MACD has begun improving from oversold levels with an RSI near 50, and the setup is characterized as early recovery; if the two-quarter earnings improvement persists, the technical picture may resolve quickly without a further significant price decline.
Free cash flow converting at only 36% of net income — flagged as a red flag — means the business is retaining far less cash than reported earnings suggest, raising questions about earnings quality and the durability of the per-share growth story.
→StableQuality breakdown
- Expectation
- Free cash flow conversion improves above 60% of net income for 2 consecutive quarters, reducing the gap between reported earnings and actual cash generation.
CounterA strong Piotroski F-Score of 8 out of 9 indicates the business is improving across multiple financial health dimensions simultaneously; the weak cash conversion may reflect a specific working-capital or capital-expenditure cycle rather than a structural impairment.
The two most recent quarters both beat consensus estimates — after two consecutive misses in the prior two periods — suggesting the business may be stabilizing and that the negative earnings narrative captured in the bear case reflects conditions that are beginning to improve.
→StableEarnings
- Expectation
- EPS surprise remains positive for the next 2 quarterly reports, extending the recovery in earnings delivery to 4 consecutive beats.
CounterThe prior two misses included a -4.7% and -4.0% negative surprise, and the two recent beats were narrow (5.1% and 0.8%); an average negative surprise across all four quarters of -0.7% means the trailing earnings trend barely nets positive, and the recovery is fragile.
With 15% headroom to the $3,572 analyst consensus target and a risk/reward ratio of approximately 2.8-to-1, the position geometry is attractive for a recovery scenario — the asymmetry rewards patience if the technical and earnings headwinds resolve over the next 12 months.
→StablePrice targets
- Expectation
- Price closes above $3,400 within 12 months as the technical downtrend resolves and the earnings recovery narrative takes hold.
CounterAn elevated put/call ratio of 1.36 indicates the options market is skewed toward downside hedging; if the options market's skepticism proves correct, the 15% upside headroom could be consumed by the downside before the target is reached.
Per-dimension breakdown
Quality
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| ROA | 7.6 |
| Gross margin | 6.4 |
| Op margin | 7.6 |
| Net margin | 6.2 |
| Current ratio | 3.6 |
| FCF quality | 2.9 |
| Moat | 6.4 |
| Piotroski F | 8.9 |
- ▸Earnings quality RED FLAG: 36% FCF/NI
- ▸Strong Piotroski F-Score: 8/9
Growth
4.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.6 |
| EPS growth | 3.5 |
Momentum
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 4.0 |
| Volume | 0.0 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -3.6%/30d — confirmed downtrend
Sentiment
7.8/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 9.0 |
| Price target | 8.5 |
| erm sentiment | 5.0 |
- ▸Analyst upside: 29%
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸Negligible insider buying — $318,919 (0.001% of mkt cap)
Peer rank
5.4/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.9 |
| quality rank | 7.5 |
| growth rank | 5.2 |
Technical
4.2/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 4.5 |
| support resistance | 4.1 |
| 52w position | 4.0 |
Risk (lower is worse)
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.5 |
| days to cover | 9.6 |
| volatility | 5.3 |
| put call | 5.6 |
| implied vol | 6.9 |
| max pain risk | 3.0 |
| beta | 10.0 |
- ▸Above max pain $1520
Catalyst
3.9/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 2.1 |
- ▸Earnings concerns: 2B/2M
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more. | News modifier -1 (HOLD_IF_HOLDING → SELL_IF_HOLDING).
Engine technical detail
verdict_path:
L4:PATH_F_HOLD|L3:NEWS_MOD=-1Passed (8)
- MOMENTUM:5.7>=5.5
- ASYMMETRY:2.8>=1.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:89d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (0)
none
Warning (1)
- DEATH_CROSS:momentum=5.7>=5.0 recovering
Reward-to-Risk
2.82
Upside
+16.2%
Downside
5.7%
Sizing output
AVOID
SetupRECOVERY — Death cross but MACD improving, RSI 49
EdgeNO_EDGE — No clear edge identified
SuitabilityMODERATE — Balanced profile
Investment implication
None of the engine's positive-conviction paths (C-quality, D-momentum) triggered — the F-path HOLD reflects balanced signals. Strongest-cleared gate: MOMENTUM:5.7>=5.5. Top dim: Sentiment at 7.8; weakest: Catalyst at 3.9. No conviction either direction.
The strongest dimensions are Sentiment at 7.8, Risk (lower is worse) at 7.0, and Value at 6.4; the weakest are Catalyst at 3.9, Growth at 4.0, and Technical at 4.2. The V9 engine cleared all gates with 1 warning, producing an asymmetric reward-to-risk of 2.82 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1The 200-day moving average slope of -2.8% over the past 30 days, combined with a death cross, constitutes a confirmed downtrend that historically precedes further near-term weakness before a durable base can form.
Trip ifThe 50-day moving average crosses above the 200-day moving average, confirming a golden cross and removing the downtrend signal.
- P2Free cash flow converting at only 36% of net income — flagged as a red flag — means the business is retaining far less cash than reported earnings suggest, raising questions about earnings quality and the durability of the per-share growth story.
Trip ifFree cash flow conversion rises above 60% of net income for 2 consecutive quarters.
- P3The two most recent quarters both beat consensus estimates — after two consecutive misses in the prior two periods — suggesting the business may be stabilizing and that the negative earnings narrative captured in the bear case reflects conditions that are beginning to improve.
Trip ifEPS surprise falls below 0% for 2 consecutive quarters, ending the recent recovery in earnings delivery.
- P4With 15% headroom to the $3,572 analyst consensus target and a risk/reward ratio of approximately 2.8-to-1, the position geometry is attractive for a recovery scenario — the asymmetry rewards patience if the technical and earnings headwinds resolve over the next 12 months.
Trip ifPrice closes above $3,572 for 5 or more consecutive sessions, confirming the analyst target has been reached.