The CEO is smart enough to only broadcast negative news. Virtually all the growth in this company is via buybacks and inflation. People don't realize that after a company gets 10 years old there is virtually no growth except for inflation. Thus, if we get 5 percent inflation and 10 percent buybacks plus 2 percent internal, we get 17 percent long-term growth.
Sorry boys, buy I have received compliments from numerous people from my site. I really feel for you if you believe anything in print.
I also forgot to mention one company KMRT. And if I am not mistaken, they went into bankrupcy. The investment firm that owns a large percentage of AZO, got involved with them, they cancelled all the old shares, and issued new shares. How would you feel if you were an old shareholder of KMRT and all the stores are still there, the new company is doing fine, and you get zilch. The moral thing to do would of been sell off all the stores.
A constant buyback turns flat earnings and revenues into earnings per share growth by definition. EPS = earnings/shares.
As for using debt to buyback shares, I hope they get away from that now that the p/e is around 12. They should eliminate the debt. AZO is my test case for this idea. If AZO goes down, within the next 10 years, I will never buy a company with rising debt again. Debt stalled quarter over quarter last quarter (rising a little), it could go down this quarter. It will be fun to watch.
Sometimes I wonder if a business like autoparts is not one long-term scam by large money managers. They want AZO to fail after about 20 years, with a new autoparts store to rise in its ashes, with new option plans. Then after the growth stalls, they set it up to go bankrupt with a new autoparts store to be the new rising star. A perpetual cycle. Who gets hurt, us and all the workers with retirement money in the stock market.
It depends on management! Good management can extend growth for much longer than 10 years via new products (drug companies like AMGN), increased market share (a la DELL), or geographical expansion (like WMT).