AutoZone To Buy Back $1.5B In Stock


AutoZone, the US largest retailer of aftermarket automotive parts and accessories, announced a stock repurchase program of $1.5 billion in addition to the existing plan. At the end of the second quarter (ended Feb. 13), the company had $717.6 million remaining under the existing authorization.

Since the inception of AutoZone’s (AZO) stock buyback program in 1998, the board of directors has authorized share repurchases of $26.15 billion, including the recent authorization. Shares declined 1.3% to close at $1,323.57 on March 23.

AutoZone’s CFO Jamere Jackson commented, “AutoZone’s continued strong financial performance allows us to grow our business, return meaningful amounts of cash to our shareholders and maintain our investment grade credit ratings.”

Earlier this month, the company reported fiscal 2Q results. Net earnings jumped 20.5% on a year-over-year basis to $14.93 per share and beat Street estimates of $12.84 per share. Net sales increased 15.8% to $2.91 billion and exceeded analysts’ expectations of $2.76 billion. (See AutoZone stock analysis on TipRanks)

On March 17, Wells Fargo analyst Zachary Fadem raised the stock’s price target to $1,500 (13.3% upside potential) from $1,375 and maintained a Buy rating.

Fadem reiterated his bullish stance on aftermarket auto part retailers on an “onslaught” of prospective 2021 upside catalysts, which are not reflected in the current valuation. Currently, Fadem believes that AutoZone’s share price reflects an attractive entry point.

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating. That’s based on 4 Buys and 3 Holds. The average analyst price target of $1,419.29 implies 7.2% upside potential to current levels. Shares have jumped 63.7% over the past year.

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