This week, I will run you through the most important buyback announcements for the week of June 18th till June 22th, 2012, which turned out to be a very active week in terms of buyback activity.
While consumers and governments across the world are strapped for cash, corporations have plenty. Rather than signal long-term trust and pay more generous long-term oriented dividends, many of them have adopted share repurchases to buy back their own stock. Investors welcome these announcements as they boost earnings per share and provide a lot of support for the share price during the repurchase periods.
GNC Corp (GNC) the holding company selling vitamins, minerals and herbal supplements announced a $300 million share repurchase program, sufficient to retire 7.6% of its shares outstanding. GNC will start execution of the program on July 31 and will finance the plan with cash, external financing or a combination of both. Shares of GNC have returned 28% so far in 2012 after the company issued full year earnings guidance earlier this year, which exceeded analysts' consensus. Investors were pleased with the announcement as shares ended the week 4.7% higher. Shareholders currently receive a quarterly dividend of $0.11 per share for an annual dividend yield of 1.2%
Autodesk (ADSK) the designer of software and services announced that it has extended its current share repurchase program with 30 million shares to a total of 42 million shares for a consideration of roughly $1.4 billion. In total, the plan is sufficient to repurchase about 18.0% of its shares outstanding. The company takes advantage of a 20% correction in its share price in recent months. Despite the pullback, shares still trade with gains of 11% year to date after the company issued a strong outlook for 2013. The sizable repurchase program failed to impress investors who saw their holdings increase by merely 1.3% this week. Currently Autodesk does not pay a dividend.
Fulton Financial Corp (FULT) the multi-bank financial holding company announced a 5 million share repurchase program. The program, with a value of roughly $50 million, is sufficient to retire about 2.5% of its shares outstanding. Shares in the financial holding company trade flat so far in 2012, trading in a tight $9.5-$10.5 trading range. Investors react positively to the announcement of the program, with shares trading up 3.7% for the week. Currently, the company pays a $0.07 quarterly dividend, for an annual dividend yield of 2.8%
PetSmart (PETM) the provider of a wide product assortment of pet services announced a $525 million share repurchase program which is sufficient to retire 6.7% of its shares outstanding. The program will start by the end of July and is expected to be completed before the beginning of 2014. Over the last four years the company has steadily retired 10% of its shares outstanding already. Shares are up 53% over the last year after the company upped its annual earnings forecast for 2011 and 2012. Currently PetSmart pays a quarterly dividend of $0.17 for an annual dividend yield of 1.0%
Oracle (ORCL) the enterprise software company announced a $10 billion share repurchase program in the beginning of the week. The program, which is sufficient to retire 7.2% of its shares outstanding, is welcomed by investors who sent shares higher on Tuesday, the day of the announcement of the program. So far this year, shares in Oracle have returned 9%, with shares trading in a relatively tight $26-$30 price range. Oracle currently pays a quarterly dividend of $0.06, for an annual dividend yield of 0.9%
InterDigital (IDCC) the designer and developer of advanced technologies for wireless communications announced an increase in its authorized repurchase program. The company added $100 million to its current program of $100 million, which combined, is sufficient to retire 17% of its shares outstanding. The company will finance the repurchases with the sale of 1,700 patents and patent applications to Intel (INTC) for $375 million in cash. Investors react positively to the sale and the repurchase program, sending shares up 16% on the week. So far this year, shares in InterDigital have lost 39% after the company issued a weak first quarter earnings outlook. Currently, InterDigital pays a quarterly dividend of $0.10 per share, for an annual dividend yield of 1.5%
Dril-Quip (DRQ) the manufacturer of offshore drilling and production equipment for deepwater drilling announced a $100 million share repurchase program. The program, which is sufficient to retire 4.0% of its shares outstanding, comes after shares have lost around 5% of their value since the start of 2012 amidst falling oil prices and a weak guidance for the full year of 2012. Shares of Dril-Quip ended the week flat.
During the last week, repurchase activity remained high, as total announced deal size came in close to $12 billion, making it a rather active weeks in terms of buyback activity. The high level of activity was largely explained by Oracle's massive $10 billion repurchase program.
Cash-rich companies still refuse to significantly raise long-term dividends. Rather, they use one-time repurchase agreements with far less signaling power as a dispersion tool of excess cash to their shareholders
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.