AutoZone Board Approves $1.5B Share Buyback Plan; Street Is Bullish

AutoZone announced that its Board of Directors has authorized an additional share buyback program of $1.5 billion. The additional buyback program takes the automotive parts and accessories retailer’s share repurchases to a total of $24.65 billion.

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AutoZone’s (AZO) CFO Bill Giles said, “AutoZone’s continued strong financial performance allows us to repurchase our stock while maintaining our investment grade credit ratings.” He said “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.”

Earlier this month, AutoZone reported mixed 1Q results. The company’s revenues of $3.15 billion grew 12.9% year-over-year but missed analysts’ expectations of $3.16 billion. However, its 1Q earnings grew 30.1% to $18.61 per share and exceeded the Street’s estimates of $17.77 per share. (See AZO stock analysis on TipRanks)

On Dec. 11, Jefferies analyst Bret Jordan upgraded the stock from Hold to Buy and lifted the price target from $1,230 to $1,325 (12.4% upside potential). The analyst said, “Longer term, we expect AZO’s DIFM [do-it-for-me] segment will continue to outpace overall industry sales growth as the company expands commercial operations and gains share, which should translate into meaningful EPS growth.” Jordan noted that AutoZone has a track record of an “aggressive” share buyback program.

Currently, the Street has a bullish outlook on the stock. The Strong Buy analyst consensus is based on 12 Buys and 2 Holds. The average price target stands at $1,373.29 and implies upside potential of about 16.4% to current levels. Shares have declined 1% year-to-date.