Swelling Cash Pile Keeping Shareholders Of This Stock Very Happy [AutoZone, Inc., Berkshire Hathaway Inc.]

AutoZone may deliberately be keeping its common shares outstanding low as a way to boost its share price performance and keep shareholders happy.

But an $18.0-billion stock like this could easily effect a 10-for-one share split to boost its liquidity. Management seemingly doesn’t show much interest or it would have done so already; with a share price performance like this, perhaps it doesn’t have to.

The company’s fiscal second quarter handily beat Wall Street estimates, and like so many other stocks this year, it sold off on the news.

As much as this stock has appreciated over the last several years, it doesn’t seem overpriced in terms of earnings valuation, and current estimates for future quarters and the current fiscal year will be going up.

Corporate share repurchases are a powerful tool, and they’ve proven to work well for shareholders. (See “The Six Things I Look for in a Company Before Buying Its Stock.”) Plus, they’re not just for dividend paying stocks.

As corporate cash balances continue to swell, share buybacks are likely to increase this year.

This article is brought to you courtesy of Mitchell Clark from Profit Confidential.

Pages: 1 2

Leave a Reply

Your email address will not be published. Required fields are marked *