Wall Street Slept on This Amazon-Proof Business Model. It’s Now at a 5-Year Discount.
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AZO's forward P/E dropped to 18, below its 5-year average, even as Q3 EPS of $38.07 beat the $36.17 consensus and commercial sales grew 10%.
AZO fell 16% while SPY gained 24%, yet ORLY's 8.1% comparable sales growth confirms the industry tailwinds remain strong.
Customers pay $20 more to visit stores over ordering online, leaving just 1-2% of AutoZone sales digital despite steep delivery discounts.
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While the market obsesses over every NVIDIA earnings whisper, an unglamorous parts retailer in Memphis has quietly become one of the most interesting contrarian setups of 2026. On a recent Barron's Streetwise episode, host Jack Hough and D.A. Davidson analyst Michael Baker laid out a thesis that cuts against the current AI mania: AutoZone is "the opposite of what the market is fixated on right now," and the price tag has finally come down to meet the opportunity.
The "Consult to Sell" Moat Wall Street Keeps Underestimating
The easy short pitch on auto parts retailers was simple: Amazon will eat them. Baker's response is that the experiment already ran. Amazon pushed aggressively into auto parts back in 2017, and the incumbents kept compounding right through it.
The most damning evidence for the Amazon bear case comes from the retailers' own pricing. AutoZone (NYSE:AZO) and its peers offer steep online discounts, typically $20 off a $100 order shipped to your door, yet only 1% to 2% of sales actually happen that way. As Baker put it on the podcast, "Customers are actually paying an extra $20 to go into the store because they need to talk to the associates."
That is the moat. Baker calls it "consult to sell." Even experienced DIY mechanics want a human to confirm they are buying the right caliper for a 2014 Silverado. Add in the professional mechanic who needs the part in 30 minutes, and the e-commerce delivery model breaks down. "If they were going to be impacted by Amazon, we would've seen it already," Baker said.
A Five-Year Valuation Discount
AZO is down 16% over the past year and down 8% year to date, while the SPY is up 24% over the same one-year stretch. The forward P/E sits at 18 with a trailing P/E of 21, against an analyst target of $3,937. AutoZone's forward P/E has fallen to 18, below its five-year average of more than 19, and that compression is happening while earnings estimates have been moving up. Wall Street projects double-digit earnings gains in the fiscal years ahead.
