AutoZone, Inc.
(Darden Business Publishing: UVA-F-1672)
Questions
1. How has AutoZone’s stock price performed over the previous five years?
Note: Other than calculated AutoZone share price an SP500 Index annual return, you can also insert
a chart of AutoZone share price and SP500 behavior since 29/12/2006 (data available in the template)
2. Other financial measures, such as sales growth, net income growth, EPS, EPS growth
and ROIC, are consistent with the stock price performance?
3. How does a stock repurchase work? Why would a company use this tactic?
4. What impact does the stock repurchase have on the main financial measures?
Note: Estimate the impact on sales growth, net income growth, EPS, EPS growth and ROIC, if during
the period between 2007 and 2011 the company had reduced the debt instead of spending the cash on
the share repurchases
5. How much of AutoZone’s stock price performance should we attribute to the share
repurchase program?
6. Assume that AutoZone is planning to stop its share repurchase program. What
would be the best alternative use of those cash flows? How each alternative might
influence the portfolio manager’s decision about his position in AutoZone?
Notes:
1. Be aware there isn’t a “correct answer” to the case. You will have to make some
assumptions that should be clearly justified to improve your final mark.
2. Your case solution (Excel file called “AutoZone CS - Template”. Please add your
name to the file name) should be sent by e-mail until 4.30 pm of December 2
([email protected]).
3. I am available to help you regarding any doubt you will have during your work.
Good work!
