Using an unlevered Free Cash Flow to Firm (FCFF) model, we project AutoZone, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 8.3% to 6.3% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 11, DPO 322, DIO 261). At a 8.0% WACC with mid-year discounting, the terminal value (86% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 21.7x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $5985.37 per share, suggesting AZO is undervalued by 76.7% at the current price of $3387.12.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 3,706 | 3,989 | 4,292 | 4,553 | 4,839 | 4,960 |
| (−) Net Interest | 386 | 416 | 447 | 475 | 504 | 517 |
| (+) D&A | 898 | 985 | 1,078 | 1,164 | 1,209 | 1,239 |
| EBITDA | 4,990 | 5,390 | 5,818 | 6,191 | 6,552 | 6,716 |
| (−) Tax | 762 | 820 | 883 | 936 | 995 | — |
| (−) CapEx | 1,057 | 1,138 | 1,225 | 1,299 | 1,380 | — |
| (−) ΔWC | -680 | -77 | -83 | -71 | -78 | — |
| Free Cash Flow (FCF) | 3,851 | 3,509 | 3,793 | 4,027 | 4,255 | — |
| Peers' EBITDA Multiple | 21.7x | |||||
| Terminal Value | 145,808 | |||||
| WACC / Discount Rate | 8.01% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 3,705 | 3,126 | 3,129 | 3,075 | 3,008 | 99,183 |
| Enterprise Value | 115,225 | |||||
| Projection Period | 16,042 | 13.9% | ||||
| Terminal Value | 99,183 | 86.1% | ||||
| (−) Current Net Debt | 12,017 | |||||
| Equity Value | 103,208 | |||||
| (÷) Outstanding Shares | 17M | |||||
| Fair Price | $5985 | +76.7% | ||||
| WACC \ EV/EBITDA Exit Multiple | 17.7x | 19.7x | 21.7x | 23.7x | 25.7x |
|---|---|---|---|---|---|
| 6.0% | $5429 | $6010 | $6592 | $7174 | $7756 |
| 7.0% | $5170 | $5725 | $6280 | $6835 | $7390 |
| 8.0% | $4926 | $5456 | $5985 | $6515 | $7045 |
| 9.0% | $4694 | $5200 | $5706 | $6212 | $6718 |
| 10.0% | $4474 | $4958 | $5441 | $5925 | $6408 |
Current price: $3387.12. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.