Brazilian steel maker, Companhia Siderurgica Nacional (SID), or CSN recently announced the approval of its board of directors of a new share buyback program. The repurchases will be done solely to improve shareholder return.
As disclosed, Companhia Siderurgica Nacional has the authorization to buy back approximately 26.8 million shares at a price not exceeding the market value. The shares bought back will be held in treasury for cancellation or sale. Having begun on Jun 26, the program will likely conclude on Jul 25, 2014.
Earlier, in May 2014, Companhia Siderurgica Nacional completed the buyback of 67.9 million shares, while in April it finished repurchasing approximately 70.2 million shares. These authorizations were made in April and March respectively.
In addition to share buybacks, Companhia Siderurgica Nacional follows a consistent policy of rewarding its shareholders through payment of dividends and interest on equity, with roughly R$1.7 billion paid in 2013.
We believe Companhia Siderurgica Nacional is well positioned to benefit from rising infrastructural demand worldwide. The steel industry in Brazil is likely to get a boost from substantial investments planned for the development of ports, railroads, airports, wind farms and roads, among others. Apart from steel, Companhia Siderurgica Nacional’s exposure to iron ore mining, cement and infrastructure projects will also work in its favor.
Companhia Siderurgica Nacional currently has a market capitalization of roughly $6.2 billion and holds a Zacks Rank #4 (Sell). Some better-ranked stocks in the industry include Grupo Simec S.A.B. de C.V. (SIM), Universal Stainless & Alloy Products Inc. (USAP) and ThyssenKrupp AG (TYEKF). While Grupo Simec and Universal Stainless & Alloy sport a Zacks Rank #1 (Strong Buy), ThyssenKrupp holds a Zacks Rank #2 (Buy).
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