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AutoZone Authorizes Additional Share Buyback Worth $750M

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AutoZone, Inc.’s (AZO - Free Report) board of directors has authorized a share buyback worth $750 million. This authorization is in addition to the company’s ongoing repurchase program. Including this new authorization, the company’s board has authorized a total of $18.7 billion for buying back shares since 1998.

AutoZone has enough liquidity to repurchase shares without compromising on financial strength and credit ratings. The company had increased its share repurchase authorization by $750 million in both Mar and Sep 2016. The company is committed to enhance shareholder value via share repurchases while maintaining sufficient liquidity to execute its plans.

In fiscal 2016, AutoZone repurchased 1.9 million shares for $1.45 billion while in the first half of fiscal 2017 the company bought back 734,000 shares for roughly $561 million. At the end of the last reported quarter the company had shares worth $585 million left for repurchase.

In the second quarter of fiscal 2017, AutoZone reported 8.8% year-over-year growth in earnings per share to $8.08 and 1.4% year-over-year increase in revenues to $2.29 billion. However, both the figures missed the Zacks Consensus Estimate. The company opened 33 stores in the U.S., three stores in Mexico and one in Brazil. As of Feb 11, the total store count was 5,872 for the company.

Autozone underperformed the Zacks categorized Retail/Wholesale-Auto Parts industry in the last three months. The share price of AutoZone decreased 8.6%, while the industry experienced a 6.4% decline. The company is facing cost headwinds related to new distribution centers openings and increased frequency of deliveries to stores.  

Zacks Rank & Key Picks

Currently, AutoZone carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the auto space include Allison Transmission Holdings, Inc. (ALSN - Free Report) , Fiat Chrysler Automobiles N.V. and PEUGEOT SA . All the three companies sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Allison Transmission has an expected long-term growth rate of 11%.

Fiat has an expected long-term growth rate of 21.7%.  

PEUGEOT has an expected long-term growth rate of 11.5%.

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