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AutoZone, Inc. Message Board

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  • value529 value529 May 26, 2004 3:57 PM Flag

    P/E = 12.8

    <<yes, they could pay off all their debt if they wanted to in 2 years.........but their EPS would basically grow 2% per year because they would not be buying back shares reducing the share count. What kind of PE does a company with thin margins and flat EPS get? Not good. AZO in the $80's is a HORRIBLE investment.>>

    If they paid off their debt and shares outstanding were flat, EPS would grow 2%? Where do you get that number? Only 15% of the 29% EPS growth came from buybacks. Net Income was up 14%, so under the debt-repayment scenario, EPS would grow 14%, NOT 2%, as you say.

    And there would be an additional boost from not having to pay interest expense ($90M) on all that debt anymore (net of taxes). So there's another $60M boost to net income in the debt-repayment scenario.

    If you're down on AZO, fine, but at least post arguments that make sense (e.g. competitive pressures may erode their margins), and stop whining about debt.

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