Shares of AutoZone, Inc. AZO gained 2.46% to close at $805.29 on Mar 23 after the company announced that its board of directors has increased its share repurchase authorization by $750 million. Including this new authorization, the company’s board has authorized a total of $17.2 billion for buying back shares since 1998.
AutoZone remains focused on enhancing shareholder returns, while simultaneously maintaining adequate liquidity for its business strategies. The company has enough liquidity to repurchase shares without compromising on financial strength and therefore, the credit ratings.
AutoZone had cash and cash equivalents of $208 million as of Feb 13, 2016, up from $151.5 million as of Feb 14, 2015. During the first half of fiscal 2016, AutoZone generated net cash flow of $364.2 million before share repurchases and changes in debt compared with $248.2 million in first-half fiscal 2015.
AutoZone’s strong cash flows help it to aggressively buy back shares. In Oct 2015, the company increased its share repurchase authorization by another $750 million. Before that, in Mar 2015, the company raised its share repurchase authorization by $750 million.
In fiscal 2015, the company repurchased 2 million shares for $1.3 billion. In the first quarter of fiscal 2016, AutoZone repurchased 537,000 shares for $400 million. In the second quarter, the company repurchased 197,000 shares for $150 million. AutoZone had shares worth $548 million remaining for repurchase at the end of the second quarter of fiscal 2016.
Currently, AutoZone carries a Zacks Rank #3 (Hold).
Stocks that Warrant a Look
Some better-ranked automobile stocks include Wabash National Corp. WNC, Federal-Mogul Holdings Corporation FDML and Superior Industries International, Inc. SUP. All the three stocks sport a Zacks Rank #1 (Strong Buy).
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