Moody's upgrades AutoZone's credit rating

NEW YORK (AP) -- Moody's Investors Service raised the credit rating of AutoZone Inc. by one notch on Thursday, saying that the auto-parts retailer is benefiting as drivers hang on to their cars longer.

Moody's boosted AutoZone's unsecured debt to "Baa1" from "Baa2" and assigned it a "stable" outlook, concluding a review that began on Dec. 16. "Baa1" is three notches above speculative-grade or "junk" status.

The ratings firm said it took into account AutoZone's "solid" financial measurements, which are being helped by the average age of vehicle and the number of miles driven. Its Duralast brand earns higher profit margins than competitors, Moody's said.

The company reported last month that first-quarter net income rose 7 percent to $218.1 million on a 5 percent increase in revenue.

AutoZone, based in Memphis, Tenn., also announced last month that it increased its stock-repurchase program by $750 million. Companies buy back their own stock to bolster the share price and improve earnings per share. Moody's said Thursday that although AutoZone "has an aggressive share repurchase program, its overall financial policy is balanced," and management keeps borrowing within a target range.

The shares were down $4.29, or less than 1 percent, to $473.65 in afternoon trading.