According to Reuters,AutoZone Inc.(AZO) has been awarded a ‘BBB’ rating by Fitch Ratings for the issue of $500 million 3.7% notes due 2022.The company will utilize the proceeds from the offering in repaying commercial paper. AutoZone had total debt of $3.5 billion as of February 11, 2012.
The rating underscores the company’s leading position in the retail auto parts and accessories aftermarket. It also reflects the company’s strong operating performance, credit profile and aggressive share repurchases.
In March 2012, AutoZone announced the repurchase of $750 million of the company’s common stock in connection with its ongoing share repurchase program which was initiated in 1998.
During second-quarter 2012, the company repurchased 501,000 shares of its common stock for $173 million, with an average price of $345. At the end of the quarter, the company had $486 million remaining under its current share repurchase authorization.
AutoZone is a leading retailer and distributor of automotive replacement parts and accessories with stores in the U.S. and Mexico. The company serves the Do-It-Yourself (DIY) retail, Do-It-for-Me (DIFM) commercial and other customer markets. It competes with O’Reilly Automotive Inc. (ORLY) and Advance Auto Parts Inc. (AAP), both of which have posted an impressive rise in profits in their earlier reported quarters.
AutoZone recorded earnings of $4.15 per share in the second quarter ended February 11, 2012, compared with $3.34 in the corresponding quarter last year. The results surpassed the Zacks Consensus Estimate by 11 cents. In absolute terms, profits hiked 13% year over year to $166.9 million.
Revenues in the quarter shot up 9% year over year to $1.8 billion, matching the Zacks Consensus Estimate. Domestic same store sales (sales for stores open at least one year) increased 5.9% during the quarter.
Currently, we have a long-term Neutral recommendation on AutoZone. The stock currently retains a Zacks #3 Rank, which implies a “Hold” rating for the short term.
