Gary Balter View Quotations

Our outperform rating was based on our view that the management team was doing an excellent job of turning around the margins at this large industry player. The market's valuation at around 6 times cash flow we believe made this an attractive acquisition target. The questions now will be whether another buyer steps in.

The stock trades above a level that we would view as appropriate for the current earnings that, absent signals of improvement or takeover, would imply downside.

While every quarter is important, we view AZO as a company in transition and would discount flat comps or sluggish gross margins as more a reflection of near term weather trends than a concern.

We believe that the turnaround story is very much on track and we view AutoZone as an interesting story for 2006.