The board of Delphi Automotive PLC (DLPH) has authorized a new share repurchase program for $1.5 billion. The program will start once the previous share repurchase authorization is fully utilized. The company will repurchase the shares from the open market or in privately negotiated transactions. However, the timing and amount of the repurchases will depend on various factors including market conditions and share price.
The new repurchase authorization reflects management’s confidence in Delphi Automotive’s long-term growth prospects and free cash flow generation capacity. The company believes in regularly deploying capital to enhance shareholder value.
The strong balance sheet and free cash flows of Delphi Automotive allow it to follow an active capital deployment strategy. Delphi Automotive had cash and cash equivalents of $1.03 billion as of Sep 30, 2014. In the first nine months of 2014, operating cash flow increased to $1.3 billion from $1.1 million in the year-ago period.
Consequently, in the first nine months of 2014, the company had repurchased 10.0 million shares for $674 million. As of Oct 23, 2014, the company had $469 million balance remaining under the old repurchase program.
Delphi Automotive’s board had authorized the previous $1 billion share repurchase program in Jan 2014. In the same month, the company increased its annual dividend to $1.00 from 68 cents per share.
Delphi Automotive currently carries a Zacks Rank #3 (Hold). Investors interested in the auto industry could consider better-ranked stocks like Advance Auto Parts Inc. (AAP), O'Reilly Automotive Inc. (ORLY) and Douglas Dynamics, Inc. (PLOW), all sporting a Zacks Rank #1 (Strong Buy).
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