I must confess to a love-hate relationship with AutoZone (NYSE:AZO). No, I'm not talking about that sinking feeling you get after your vehicle malfunctions, followed by the sheer delight of getting it fixed. Instead, it comes from every serious investor's inner conflict between growth and cash flow. We love the cash flow. But we also know that growth drives operating efficiencies, multiple expansion, and a host of other virtues that spell a higher stock price. It's a real dilemma.

One look at AutoZone's third-quarter earnings release forces an investor to face this choice head-on. Total revenues declined by nearly 2%, driven by comparable-store sales, or comps, that were down by 5%. And yet the company managed to deliver an apples-to-apples earnings-per-share increase of 16%, excluding unusual gains in last year's quarter from warranty claims.

How is this possible, you say? Tight control of the business and the wonders of cash flow. Operating profits were up 8% on improved gross profit and lower expenses. The other portion of EPS growth came from a lower share base due to, shall we say, aggressive share repurchases. Over the last 12 months, the company reduced its outstanding shares to 79.5 million from 85.2 million, or 7.7%.

That's my dilemma. Although CEO Bill Rhodes said on the earnings call that he believes AutoZone has "thousands of additional new store opportunities," the company is managing itself as a prodigious cash cow. Now there's nothing wrong with that, particularly when a company knows how to manage in this fashion, as AutoZone has proven it can do. Again on the call, Chief Financial Officer Michael Archibald said the company needs comp-sales growth of 1% to 2% per quarter to leverage selling, general and administrative expenses. This organization is screwed down tight, in sharp contrast to The Pep Boys - Manny, Moe & Jack (NYSE:PBY), which I think is clearly floundering.

So, an investor has to decide what's most important. Over the last two years, AutoZone has grown total revenues by only 3% per year. Over those two years, Advance Auto Parts (NYSE:AAP) has notched 7% annual revenue growth, while O'Reilly Automotive has experienced revenue growth of 15% per year. On virtually every measure you can think of from sales per square foot to profit margin to return on equity, AutoZone is clearly more effective than its competition. The company just isn't growing, although it trades at a very modest trailing-12-months price-to-earnings ratio of 13 for such a well-run company. The other two competitors are in the low 20s.

For anyone who invests in retail companies, I can't find a more stunning example of the growth-vs.-cash flow dilemma. It comes down to investment philosophy. I'm biased toward the growth; you have to think that over time, the competitors might start to take some meaningful market share from AutoZone. But it's hard to ignore that cash flow. At the rate AutoZone is buying back shares, the company will be public for only another eight or nine years. If you buy now, you might be the only shareholder left. Could you figure out what to do with all that cash flow?

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Fool contributor Timothy M. Otte can't tell the difference between a dipstick and a camshaft. But he welcomes comments on his articles. He doesn't own the stock of any company mentioned in this article.