Healthcare services company, Omnicare, Inc. (OCR), recently raised its quarterly dividend by 10% to 22 cents per share. This subsequently lifts the annual dividend to 88 cents per share from the current figure of 80 cents.
The raised quarterly dividend is payable on Dec 26, 2014, to shareholders of record as of Dec 16. Omnicare’s previous dividend increase was made in Dec 2013, when it raised the quarterly payout by 43% to 20 cents a share from 14 cents.
The fifth consecutive annual increase in Omnicare’s quarterly cash dividend can be primarily attributed to the company’s strong financial performance. The company reported better-than-expected third-quarter 2014 results. Earnings of 95 cents per share beat the Zacks Consensus Estimate by a couple of cents, while net sales of $1.61 billion also steered ahead of the benchmark.
Earnings per share (excluding special items and cash EPS adjustments) increased 9.2% from the year-ago quarter driven by 6.1% growth in net sales, higher operating efficiencies.
Besides paying a consistent dividend, the company is also returning cash to shareholders in the form dividend. In the nine months ending Sep 30, 2014, Omnicare bought back 27 million shares for approximately $1 billion. Notably, Omnicare has over $340 million remaining under its current share repurchase program as of Sep 30, 2014.
The company is also benefiting from partnerships. Recently, Omnicare and McKesson Corp (MCK) signed an expanded agreement for the sourcing and distribution of branded, specialty and generic pharmaceuticals. The extended relationship is expected to drive greater pharmaceutical sourcing efficiencies for both the companies.
We remain impressed by Omnicare’s ability to convert increased sales to improved operating earnings. The company is also focused on making investments in the sales pipeline which is expected to be a key growth driver.
However, stiff competition from the likes of Cardinal Health (CAH) and PharMerica Corp. (PMC), and a booming inflation in high-cost branded drugs pose major headwinds.
Currently, OCR carries a Zacks Rank #3 (Hold).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment