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Share buybacks are an alternative to dividends for returning value to shareholders. They can be a hugely valuable tool. AutoZone (NYSE: AZO) and General Motors (NYSE: GM) are two companies that have absolutely crushed it with share buybacks.
When bad is good
Unless you're familiar with AutoZone as a company and a stock, it might seem a little backward to you. After all, what's bad for your average car owner is actually good for AutoZone and its shareholders. When consumers have a car problem, they can buy the parts and fix it themselves, or let AutoZone determine the issue; either way, for AutoZone, it's a win. It's why the company has often been lauded as a recession-proof stock -- consumers need their cars working, period.
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But beyond its consistent financial results and nearly recession-proof business model, the company has gobbled up tons of its own shares, and only one look at the graph below suggests how much impact it's had over time.
The graph forms a beautiful X as the number of shares decreases, causing the earnings per share to increase, pushing the value of the stock higher. "This is a defensive, resilient distribution business you can buy at a market multiple with the chance for earnings acceleration," says Andrew Choi, a portfolio manager at Parnassus Investments, according to Barrons.com. "But the multiple doesn't reflect the durability of its growth, despite the stock's outperformance."
In AutoZone's most recent quarter, the company reduced its share count by over 3% year-over-year, and the auto parts retailer has cut its number of shares outstanding by roughly half over the past 10 years. Here's a bonus for AutoZone investors: With all the drama surrounding tariffs, the company should remain fairly resilient given its high margins, its extensive supply chain, and the fact that its products are essential for car owners.
King of Detroit?
When it comes to auto stocks, AutoZone isn't the only one taking advantage of share buybacks. General Motors has been gobbling up shares for years, and that's provided a significant boost to the stock.
Between 2023 and 2025, General Motors announced roughly $16 billion in share buybacks -- a huge amount, considering its market capitalization sits around $45 billion. On top of those buyback announcements, the iconic Detroit automaker announced a fresh $6 billion authorization recently.