AutoZone shares have traded above $500 for most of the year but the company remains an aggressive purchaser of its own stock and recently authorized the expenditure of $750 million to buy even more shares.
The recent authorization brings the total amount the company has spent buying back stock to $14.9 billion since the program began in 1998. AutoZone does not pay a dividend.
"AutoZone's continued strong financial performance allows us to repurchase our stock while maintaining our investment grade credit ratings," said Bill Giles, AutoZone’s EVP and CFO of information technology and ALLDATA. “We remain committed to utilizing share repurchases within the bounds of a disciplined capital structure to enhance stockholder returns while maintaining adequate liquidity to execute our plans."
The share repurchase announcement follows the release in late May of financial results for the company’s third quarter ended May 10 that show the powerful impact the program has on earnings growth. Same store sales grew 4%, total sales increased 6.2% to $2.34 billion and net income grew 7.4% to $285.2 million. However, earnings per share increased 16.4% to $8.46 from $7.27 as the number of shares outstanding decline significantly from the year earlier period.
AutoZone spent $420 million to buy back 795,000 shares during its third quarter and during the first three quarters of the fiscal year the company said its spent $912 million to buy back nearly 1.9 million shares. As a result, the number of shares outstanding at the end of the most recent quarter were 33.7 million versus 36.5 million the prior year. Had no share repurchase activity occurred, AutoZone’s earning per share during the third quarter would have been $7.80, a 7.3% increase from the prior year rather than the 16.4% increase the company actually reported.
AutoZone currently operates 5,279 stores, including 4,901 locations in the U.S., 374 locations in Mexico and four stores in Brazil.