AutoZone Up on Increased Buyback Authorization - Analyst Blog

Share price of AutoZone Inc. AZO nudged up roughly 0.2% on Jun 19 after the company's board of directors authorized an added buyback of up to $750 million shares under its current share repurchase program. The strong financial performance of the company has enabled it to continue with its share repurchase strategy while maintaining its investment grade credit ratings.

The share repurchase authorization indicates AutoZone's strong liquidity position. The company had cash and cash equivalents of $145.3 million as of May 10, 2014.

AutoZone has been undertaking such share repurchase programs since 1988. Including this new repurchase program, the company has authorized a total of $14.9 billion for buying back shares. AutoZone remains focused on enhancing shareholders' returns, while simultaneously maintaining adequate liquidity for its business strategies.

AutoZone is aggressively repurchasing its shares. During the third quarter of fiscal 2014, AutoZone repurchased 795,000 shares for $420 million, reflecting an average price of $529 per share. Year to date, the company has repurchased 1.877 million shares for $912 million, at an average price of $486 per share.

Previously, in Dec 2013, AutoZone had increased the share repurchase authorization by $750 million, without compromising its liquidity position, financial strength and therefore, the credit ratings.

AutoZone reported a 16.4% rise in earnings per share to $8.46 for the third quarter of fiscal 2014 (ended May 10, 2014) from $7.27 in the year-ago quarter. Earnings were in line with the Zacks Consensus Estimate of $8.46. Quarterly revenues increased 6.2% year over year to $2.34 billion, marginally surpassing the Zacks Consensus Estimate of $2.33 billion.

AutoZone holds a Zacks Rank #3 (Hold). Stocks that warrant a look includes Pep Boys - Manny, Moe & Jack PBY, U.S. Auto Parts Network, Inc. PRTS and AutoNation Inc. AN. All these stocks carry a Zacks Rank #2 (Buy).