Autozone Stock Split 2023: Will there be an AZO Stock Split in 2023?

Autozone Stock Split 2023: Latest Price

Stock splits are back in the market, and the investors are just loving it. In the recent past, various companies have announced stock splits. Whether it is the overnight popular GameStop or mega-cap companies like Google parent Alphabet Inc., Amazon Inc., or Tesla Inc., all have announced stock splits in the past. Investors are scratching their heads as to who is next in the league of stock splits, and automotive replacement part chain AutoZone is one of the top contenders.

There are multiple reasons for the same, the topmost being its share price beyond $2400. AutoZone shares have had a fabulous trading journey, and they gained 246.8% in the last five years, out of which a 7.8% upside came in last year, and that has put AutoZone in the league of Alphabet and Amazon Inc., although its market cap of $45.2 billion is way below the other examples discussed. Also, another similarity between Amazon Inc. and AutoZone is that both companies went for a split in the decade 1990–2000. While Amazon Inc. did split stock three times between 1998 and 1999, AutoZone shares were split twice.

Autozone Stock Split 2023: Stock Split History

The history of Autozone Stock Split is tabulated below:

S.no	Split Date	Ratio	Price (close)	Price (on the previous day)	Change
1	21st April 1994	2:1	27.12	52.50	3.31%
2	3rd Feb 1992	2:1	35.62	68.25	4.38%

• There are two peculiar observations from the above table. First, the Autozone stock split has proved to be beneficial for the share price, and it has given a short-term bullish push to the price on the next day of trading post-split. On both occasions, stock shot up more than 3%, indicating the strong support of investors. Remember, a stock split does not technically impact the company or its market capitalization in any way. In the short-term push, investors generally see post-split as a physiological effect as the split makes the stock more affordable to retail investors, and those who are on the fence get lured to invest post-split as they see the share price in their range of investing and they trust owing complete shares instead of fractional shares offered by some brokers in the United States. 

• Secondly, the last Autozone stock split was in 1994, and for the last 28 years, management has ignored the topic of a stock split. The trend is nothing new, as most stocks in the S&P 500 were almost similar, and stock splits have become a rare topic in the last two decades after being in trend in the late 1990s. As stock splits are coming into the limelight again with all these big companies splitting the shares, something is very peculiar about AutoZone, as discussed below, which sets it apart from other companies.

Also Read: Amazon stock split

Autozone Stock Split 2023: Possibility of a Future Split for AutoZone, Inc

While discussing the possibility of a future Autozone stock split, we will have to discuss the functioning of the company and the thought process of management to deduce the same. There are two observations for AutoZone that significantly reduce the possibility of a future AutoZone stock split.

• Share buy-back program- Since 1998, AutoZone has been actively buying back its own shares, and they’ve been very successful at it. They’ve repurchased 86% of their outstanding shares, which amounts to $29.2 billion. This has drastically reduced the number of available shares from over 150 million in 1999 to just 18.09 million now. Considering this, doing a forward stock split might not be a good move, as it could dilute the value of each share and make a future split less likely.

• Shareholding Pattern – Most of AutoZone’s shares are owned by big institutional investors and mutual funds, about 98%. These investors like stable, steady growth and using cash flow to buy back shares. Doing a forward stock split might make it harder for them to track their returns, so it’s unlikely to happen in the future.

As much as AutoZone’s management likes the repurchase program or a less volatile environment so to say, there is little scope left to execute and continue the share buyback program. As discussed above, there are only 18.09 million outstanding shares remaining and the company simply cannot go on to buy back the shares. A forward stock split is one of the ways to continue doing that. A 2:1 stock split will suffice to continue the program for at least a couple of years down the line

Going forward, first, we will see a slowdown or break in the share buyback program, and then only there is a vague possibility of a stock split. However, investors should invest in AutoZone on the merit of the company and not only due to the share purchase program. Also, it has a good free cash flow to sustain in uncertain times. So, whether we witness a stock split for AutoZone, Inc. or not, it can be considered a safe bet.

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