After a steep drop that took place in 2025's final quarter, AutoZone (AZO +1.63%) stock closed the year up by just 5%. However, its shares have almost tripled over the past five years, showing how much momentum the automotive stock can gain when it's on a roll.
Moreover, considering some of the catalysts that could drive future growth, the recent dip may present an attractive long-term buying opportunity.
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International expansion is a promising path
AutoZone earns most of its revenue in the U.S., but its expanding international footprint implies further upside. In its fiscal 2026 first quarter, which ended Nov. 22, the auto parts retailer achieved 11.2% year-over-year comparable sales growth in its international locations, which are primarily in Mexico and Brazil, while its domestic comp sales increased by 4.8%.
NYSE: AZO
Key Data Points
Overall, AutoZone reported 5.5% comparable sales growth. While its domestic sales are still growing, the higher growth rate from its international locations shows foreign markets to be the more promising opportunity.
AutoZone has 7,710 locations worldwide. Of those, 6,666 are in the U.S. But as of the end of its last reported quarter, it had 895 stores in Mexico and 149 in Brazil -- numbers that were up by 11.9% and 12.9% year over year, respectively. Management says it plans to continue "aggressively" opening more stores. The combination of high comparable store sales growth and a growing footprint could help the stock rebound.
The stock's plunge in the latter part of 2025 was largely due to a couple of quarterly earnings misses. President Donald Trump's tariffs hurt the company's profit margins. So did expenses related to new store openings, but those short-term headwinds should translate into higher sales and earnings in the future. The current forces pushing down the stock seem to be temporary.
Is a European presence down the road?
AutoZone hasn't announced any plans to open stores in Europe, but that remains a viable option for long-term international growth. Right now, it is focused on maximizing its presence in the Americas.
However, if in a few years management pursues a piece of the market in Europe and replicates its previous successes there, its international sales could quickly accelerate. It isn't easy to gain market share on a new continent, but with its strong results in Mexico and Brazil, AutoZone has proved that it is up to the challenge. Moreover, the chain doesn't yet have any stores in Canada. That presents it with another opportunity.
The management team remains committed to opening stores at a fast rate. It added 53 new net stores in its fiscal 2026 Q1. Most were in the U.S., but 12 were in Mexico, and two were in Brazil.
It may take several years before AutoZone seriously explores the possibility of broadening its footprint into additional markets. The company seems committed to the Americas and maximizing its revenue in those areas before it considers opening locations in other countries. In my view, Autozone's long-term growth potential is enough to make the stock an attractive buy now.
