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AutoZone (AZO) Boosts Share Buyback Program on Stellar Results

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AutoZone, Inc.’s (AZO - Free Report) board of directors recently authorized the buyback of an additional $1.5 billion of its common stock related to its ongoing share-repurchase program.

The company commenced its share-repurchase program in 1998. AutoZone’s board has authorized $29.2 billion in share repurchases in total to date, including the above amount. AutoZone, which had tapped brakes to the program amid the coronavirus-induced uncertainty, resumed its share-buyback program in the first quarter of fiscal 2021, thereby boosting investors' confidence.

The company’s robust financial performance during the last reported quarter (first quarter of fiscal 2022) enabled it to repurchase additional stock while maintaining its investment-grade credit ratings. AutoZone reported earnings of $25.69 per share for the first quarter of fiscal 2022 (ended Nov 20, 2021), up from the prior-year figure of $18.61. Net sales during the last reported quarter also increased 16.3% year on year to $3,668.9 million.  

Moreover, the company is dedicated to using the proceeds from the share repurchase to boost shareholders’ value while maintaining sufficient liquidity to provide it with adequate financial flexibility. In fact, the company’s disciplined capital allocation approach to reinvest in the business as well as engage in meaningful investor-friendly moves is praiseworthy.

AutoZone is one of the leading specialty retailers and distributors of automotive replacement parts and accessories in the United States. It operates in the Do-It-Yourself (DIY) retail, Do-It-for-Me (DIFM) auto parts and products markets.

The company has been generating record revenues for years on stable growth in the auto parts market and expansion of the store base. AutoZone has benefited from the growing market presence of DIY retail and commercial businesses. Store-expansion initiatives, fast delivery and high-quality products are boosting the company’s market share. As of Nov 21, 2021, the company had 6,066 stores in the United States, 666 stores in Mexico, and 53 stores in Brazil, for a total store count of 6,785.

AutoZone’s omni-channel efforts to improve customer shopping experience are reaping profits. Rising e-commerce efforts, including ship-to-home next day, buy online, pick-up in stores and commercial customer ordering, are picking pace, driving traffic to the company’s online site.

The solid reputation of the Duralast brand across the professional customer base, maintenance of competitive pricing and greater engagement from store-operating teams are further fuelling AutoZone’s growth.

Zacks Rank & Other Key Picks

AutoZone currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other top-ranked stocks in the auto space include Goodyear Tire (GT - Free Report) , Tesla (TSLA - Free Report) and Harley-Davidson (HOG - Free Report) , all of which flaunt a Zacks Rank of 1.

Goodyear has an expected earnings growth rate of 196.86% for the current year. The Zacks Consensus Estimate for its current-year earnings has been revised upward by 80 cents over the last 60 days.

Goodyear beat the Zacks Consensus Estimate for earnings in the last four quarters. GT has a trailing four-quarter earnings surprise of 228.45%, on average. Its shares have rallied 91.3% over the past year.

Tesla has an expected earnings growth rate of 166.96% for the current year. The Zacks Consensus Estimate for its current-year earnings has been revised upward by 62 cents over the last 60 days.

Tesla beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing once. TSLA has a trailing four-quarter earnings surprise of 25.38%, on average. Its shares have rallied 56.7% over the past year.

Harley-Davidson has an expected earnings growth rate of 34.92% for the current quarter. The Zacks Consensus Estimate for its current-year earnings has been revised upward by 32 cents over the last 60 days.

Harley-Davidson beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing once. HOG has a trailing four-quarter negative earnings surprise of 138.45%, on average. Its shares have risen 4.2% over the past year.