Newell Rubbermaid Inc. (NWL) builds upon its commitment to continually enhance shareholder return with an expanded and extended share repurchase program. Under the expanded program, the company is now slated to buy back up to $500 million worth of shares by the end of 2017. The newly announced program will add to the company’s existing $300 million share repurchase program approved in Feb 2014, which has about $37 million remaining under the plan.
Apart from adding shareholder value, the company’s decision to expand its share buyback program also exhibits its confidence in the ongoing Game Growth Plan and long term outlook. Newell has long boasted of a strong balance sheet that coupled with ample free cash flow offers financial flexibility to fund dividend payouts and share repurchases along with value-added investments in the business to accelerate growth and expand margin.
Newell ended the quarter with cash and cash equivalents of $132.6 million. As of Sep 30, 2014, the company generated operating cash flow of $343.3 million, incurred capital expenditures of $101 million and paid dividend of $136.1 million. During the third quarter of 2014, the company bought back 3.3 million shares for $103.9 million.
Share repurchase programs are frequent among companies with a stable cash position and healthy cash flow. Other companies that recently announced new share repurchase authorizations include Brown-Forman Corporation (BF.B), Avis Budget Group Inc. (CAR), and Micron Technology Inc. (MU).
We believe that share repurchases not only enhance shareholder return but raises the stock’s market value as well. Looking ahead, Newell Rubbermaid remains confident of its growth potential, thereby raising hopes for further increase in shareholder value through dividend payouts and share buybacks.
Currently, Newell Rubbermaid carries a Zacks Rank #3 (Hold).
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