Still in the Zone

Yesterday, AutoZone (NYSE: AZO  ) reported fourth-quarter EPS of $2.27, crushing the analyst estimate of $1.93. Yet up until late this morning, the stock hadn't budged an inch, perhaps as investors eyed revenues that declined year over year to $1.83 billion from $1.84 billion (although, accounting for the extra week in the year-ago quarter, revenue actually climbed 5.5%).

The company, which sells auto and truck parts, and associated chemicals and accessories through its retail outlets, benefited from a 24% increase in commercial same-store sales. At the same time, same-store retail sales increased a paltry 1%. Core retail sales, which account for the bulk of AutoZone's revenues, have investors worried that the explosive growth phase is passed.

While the slowdown in top-line growth is disappointing, AutoZone continues to generate shareholder value by repurchasing shares and focusing on the bottom line.

And indeed, net income for the quarter increased 17% to $207.4 million, while EPS increased 31%, reflecting $891 million in share repurchases over the past year. Return on equity improved from 55.1% last year to 97.4%, while return on invested capital increased from 19.8% to 23.4%. Gross margins also improved 1.9%, while operating margins improved 2.76% to 19.7%.

Interesting fact: Since 1998, the company has bought back $2.8 billion in shares at an average price of $39.25 per share. Today, the company has a total market cap of about $8.2 billion.

So while AutoZone may no longer be a growth company, the business still generates cash and management continues to create shareholder value. Shares of AutoZone are up over 3% to $92.65.