Valuation of AutoZone: An Ex Post Analysis of Share Repurchases and Shareholder Value Creation

Abstract

AutoZone is an impressive example of disciplined capital allocation, especially when it comes to share repurchases. Since its share repurchase program was launched in 1998, the number of shares outstanding has decreased by 89%, resulting in an exceptional increase in shareholder wealth over time. AutoZone’s share price has increased from $30 in 1998 to $3,813 on April 1st, 2025, compounding at an annual return of 20.2% over the period. Through ex post estimates of intrinsic value and comparisons with repurchase prices, the value created for remaining shareholders of the share repurchase program is estimated. AutoZone’s management has proven itself to be a disciplined steward of shareholder capital. Since shares have been repurchased at prices below intrinsic value, the value transferred from selling to remaining shareholders has been immense. This thesis estimates the intrinsic value of AutoZone as of April 1st, 2025, to be $3,727 per share, closely aligned with the current market price. The historical, ex post valuations tell a different story, however, as AutoZone’s shares have traded at a significant discount to intrinsic value over time.Based on historical valuations from 1998 to 2024, this study estimates that the share repurchase program has created considerable value for shareholders. In 2024, the value creation had, on a cumulative basis, exceeded the theoretical no-share repurchase intrinsic value by $2,130, representing a 169% increase in value. This suggests that AutoZone’s performance is not solely a result of operational excellence but also exceptional capital allocation, highlighting how undervalued buybacks can be utilized to drive shareholder wealth.