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AutoZone, Inc. Message Board

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  • nuke9101 nuke9101 Aug 20, 2003 2:50 PM Flag

    Stoc k repurchase question

    AZO has better information than the "strong hands" it is buying the stock from.

    AZO is paying "high rates". High rates on what? They are using their free cash flow from their business to buy back high cost equity (stock held by the instiutions) with cash that they would normally earn 1% on in their bank account. This is the most shareholder friendly thing they can do.

    The company is probably in there buying back stock nearly everyday, making the company more valuable for those of who chose not to sell at these prices.

    AZO is doing more than $500 million in FCF per year. In the next five years the company could probably buy back 1/2 the company. The stock would double and still have the same market cap.

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    • Funny! $500 mil is also the new amount of debt that AZO is issuing right now. This company is a accident waiting to happen. Buying its stock at over 10 times book with borrowed money when interest rates are heading higher.

      • 2 Replies to too_say
      • In California they are expected to triple the car registration fees, thus people will hold on to their cars to save $1000 per year and fix their old cars.

      • When and why exaxtly should the company's sales and earnigns growth suddenly collapse heading into an economic recovery. What would be the catalyst? Just curious. It didn't crap out during the recession, it didn't crap out in the boom times. Mom and pop stores suddenly haven't gotten buyer power. The competitors are still regional, the competitors are still 1/3 the size of AZO. The suppliers need AZO as much as P&G needs Wal-mart. There are more cars on the road, driven more miles, its gotten hotter, it was gold nasty winter, stuff needs to get fixed with those rebate checks. The comps are easy going forward. The biggest buyer of the stock is the company and Fidelty doesn't own a share cuz the blew out of it a $65, so they'll probably have another analyst covering it soon and tell the PMs to load up. Good Luck to you

        This is a steady business. Your understanding of this company, industry and the economy is a recipe for an ass whooping

 
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