Adobe Systems Inc. (ADBE), one of the largest software companies in the world, recently approved a new stock repurchase program to buy up to $2.0 billion shares through the end of fiscal 2017.
Apart from rewarding shareholders, the new program will reduce the dilution resulting from stocks issued as compensation to its employees. Adobe also plans to repurchase shares in the open market or enter into structured repurchase agreements with third parties.
Adobe’s business model reflects its commitment toward returning value to shareholders with its strong cash generation capabilities. We believe that the continued share buybacks will increase investors’ enthusiasm about the stock.
Adobe’s strong balance sheet and cash flows provide financial flexibility in matters of incremental dividend, share repurchases and acquisitions. During the last concluded quarter, Adobe repurchased approximately 1.8 million shares for $127.0 million. The company also expanded its line-up of cloud-based products for designers and fabricators with the recent purchase of Aviary.
The cash and cash equivalents were $3.73 billion at quarter-end, having increased $21 million during the quarter. The debt cap ratio was 11.9%. We remain encouraged by Adobe’s strong cash position and its ability to service its long-term debts.
Adobe reported decent fiscal fourth-quarter 2014 results, with both revenues and earnings per share surpassing our expectations. We remain positive about the company’s market position, its compelling product lines (including CS cloud initiative and digital media products), continued innovation and strong balance sheet.
Currently, Adobe has a Zacks Rank #2 (Buy). Other stocks that look attractive at the moment are Imperva Inc. (IMPV) and Nuance Communications Inc (NUAN), sporting a Zacks Rank #1 (Strong Buy), and Callidus Software Inc. (CALD) with the same Zacks Rank as Adobe.
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