Shares of CR Bard (BCR) achieved a new 52-week high, touching $109.37 on Jun 13, and closed at $109.31 on the same date. The closing price of this leading medical devices maker represented a healthy one-year return of 11.3% and year-to-date return of 7.8%.
Average volume of shares traded over the last 3 months came in at approximately 639K. Currently, the stock trades at a forward P/E of 17.5x, in line with its peer group.
Growth Drivers
The recent 5% hike in dividend and a $500 million share repurchase program sparked investor confidence on the stock.
On Jun 12, CR Bard raised its quarterly dividend by a penny to 21 cents per share from 20 cents per share. This increased the annual dividend to 84 cents per share from the current payout of 80 cents.
The N.J.-based company also approved a $500 million share repurchase program on the same day. This is in addition to about $30 million outstanding shares under last year’s $500 million share buyback authorization. The company had spent roughly $131.3 million to repurchase 1.3 million shares in the first quarter of 2013.
The dividend increase along with the share buyback program underscores Bard’s commitment to deliver incremental returns to investors leveraging a solid balance sheet, healthy free cash flow and earnings power.
Bard’s solid balance sheet allows the company to support the dividend hike as well as the share repurchase program. The company exited the first quarter of 2013 with cash, restricted cash and short-term investments of $905.3 million, down 1.7% sequentially. The company’s debt-to-capital at the end of the first quarter was 43% and total shareholder investment was $1.9 billion.
Stocks to Consider
CR Bard carries a Zacks Rank #3 (Hold). Other medical stocks, which are expected to do well include CONMED (CNMD), The Cooper Companies (COO) and West Pharmaceuticals (WST). All these stocks carry a Zacks Rank #2 (Buy).
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