S&P REITERATES BUY RECOMMENDATION ON SHARES OF AUTOZONE
(Standard & Poor's) For the 12-week period ended February 13, AZO posts EPS of $2.46 vs. $2.03, $0.15 higher than our est. Same-store-sales grew 1%, in line with our view, but product mix shift and decrease in shrink led to modest gross margin expansion. Industry trends remain favorable, and AZO continues to capture share in faster-growing commercial segment. We are increasing our FY 10 (Aug.) and FY 11 EPS estimates to $13.71 and $15.23 from $13.49 and $14.68, respectively, and are raising our DCF-based target price by $5 to $185. Trading at about 11X our FY 11 EPS est., we find shares attractive.
Yeah well look at the recommendation. It is all based on EPS. Of course EPS is growing, they are buying back shares with debt. This will inflate your EPS, but there is no mention here of the negative book value, the puny amount of cash, and the massive amount of debt. I can max out my credit cards and increase my earnings by $50k this year but does that mean I am a good credit risk?