Hasbro Inc. (HAS), an American multi-national toy and boardgame company, recently announced that its board of directors has approved an additional share repurchase program worth $500 million. The additional share repurchase authorization is a part of the company’s strategy to enhance share holders’ return. The program has no expiration date.
One of the world’s largest toy makers currently has $21.4 million remaining under the $625 million share repurchase program authorized by the board in April 2010. During the recently concluded first quarter, the company repurchased 1.4 million shares for a total of $63.7 million.
The Pawtucket, Rhode Island-based company intends to build shareholders’ value and return cash to shareholders through share repurchases or dividends. The company initiated its share repurchase program in June 2005 and has adopted five successive buy back authorizations with a cumulative authorized repurchase amount of $2.3 billion. Since the start of the buy back program in 2005, Hasbro has repurchased 79.4 million shares at an average price of $29.01 per share. In February 2011, Hasbro also hiked its quarterly dividend to 30 cents per share, reflecting an upside of 20%.
Hasbro’s cash position is also good with cash and cash equivalents of $927.4 million as of March 27, 2011, further reiterating the fact that the company has strong liquidity and the ability to raise shareholders’ value
One of its competitors Mattel Inc.(MAT) also continues to make efforts to enhance shareholders’ return. In November 2010, the company raised its share repurchase authorization by additional $500 million and during the fourth quarter, Mattel increased its annualized dividend by 11% to 92 cents per share.
We appreciate Hasbro’s effort to step up long-term shareholder value and believe that an increase in share buy back authorization affirms the company’s optimistic outlook and indicates that it is heading toward strong future growth.
Hasbro currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock.
HASBRO INC (HAS): Free Stock Analysis Report
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