2 Stocks Crushing It With Share Buybacks

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.

AZO data by YCharts

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.

GM data by YCharts

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.

However, General Motors is not as resilient to recession as AutoZone, nor is it immune to the automotive tariffs. General Motors imports some of its vehicles, and it also uses a lot of foreign parts, which are scheduled to be subject to a new 25% tariff next month.

The company's share repurchases are simply a bonus for a company with a thriving core business. In 2024, for example, it grew full-year revenue by 9%, led the U.S. automotive market in total, retail, and fleet deliveries, and doubled its electric vehicle (EV) market share over the course of the year.

What it all means

While it may seem that investors prefer lucrative dividends, these two companies show just how effective share repurchases can be when executed at the right price -- that's the tricky part. That said, both of these companies have proven willing to consistently and very seriously return value to shareholders through share buybacks, and investors are reaping the benefits right now. Investors shouldn't expect that to change over the long term, and that's one more reason to keep an eye on these stocks.

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Daniel Miller has positions in General Motors. The Motley Fool recommends General Motors. The Motley Fool has a disclosure policy.