Similar to how AutoZone (NYSE:AZO) revved up its earnings per share last quarter by buying back shares, the company has once again fine-tuned its per-share profits by continuing to slim down its share count.

Revenue has been stalling for some time now, and over the past five years, the company has been able to grow sales by only 3.6% per year. Nothing changed much this quarter: Revenue clocked in a just 3.3% above last year's fourth-quarter figure.

CEO Bill Rhodes said his company "experienced less sales transactions from ongoing initiatives than expected." However, AutoZone believes that its marketing research indicates that service levels are improving and that customers should be more likely to return to AutoZone for their next purchase. Apparently, they weren't coming back this time around, since comps fell 0.2% during the quarter.

Like sales growth, profits moved barely upward -- a meager 1.7%. But the company has been working on a share-buyback program for a while now, and the results boosted earnings per share by 10.6%. Throughout the quarter, AutoZone repurchased 2.3 million shares, totaling nearly $300 million.

While the company's debt load looks to be fairly hefty on the balance sheet -- its long-term debt-to-capital ratio is 80% -- AutoZone boasts a times-interest-earned ratio of 9. Plus, the company generates bountiful free cash flow, so it can certainly handle the interest payments on all of its debt. Furthermore, its return on capital of 24.4% over the past five years, compared with the industry average of 12.4% over the same period, displays that management's strategy of taking on debt and buying back shares is quite valuable to shareholders.

AutoZone is certainly struggling to reach even mid- to high-single-digit revenue-growth rates. To be fair, it is making an effort to improve the shopping experience for customers, in hopes of bringing them back to the stores, and it obviously has some work to do to revitalize sales. But operationally, the company outpaces its competitors. Its margins are more appealing than those of rivals Advance Auto Parts (NYSE:AAP), O'Reilly Automotive (NASDAQ:ORLY), and Pep Boys (NYSE:PBY). And the company boasts the most attractive PEG ratio out of the group.

If AutoZone can begin to show signs that it is stimulating demand, its already impressive margins and returns will only improve, and the company could end up providing investors with a great investment.

Related Foolishness:

  • Two Fools dueled on AutoZone last year.
  • And some wondered whether AutoZone entered the danger zone.

AutoZone warrants three out of five stars in our Motley Fool CAPS community. Disagree? Bring your thoughts to CAPS for free!

Fool contributor Larry Rothman is happy to receive feedback, and he promises to read it when he's not being wrestled by his three children. Feel free to email him at rothmanviews@comcast.net. He doesn't have any positions in the companies mentioned. The Fool has a disclosure policy.