Airgas, Inc. ARG has announced a new program to repurchase $500 million worth of its outstanding shares. The buyback is in line with the company’s strategy to reward shareholders through substantial share repurchases and dividend growth.
During the last three years, Airgas repurchased 6.3 million shares and increased dividend by over 20%. On Apr 7, the company raised its quarterly dividend by 9% to 60 cents per share. Further repurchase will support the stock.
In the last five years, Airgas’ common stock outperformed the cumulative total stockholder return against the cumulative total return of the S&P 500 Index and the S&P 500 Chemicals Index. As of Mar 31, 2015, the company had a ROE of 18% and ROA of 6%.
In addition to dividend hikes and share repurchases, Airgas’s strong cash flow also enabled it to make acquisitions to strengthen the core business. During fiscal 2015 the company acquired 14 businesses with historical annual sales of approximately $55 million. The company is now targeting $100 million in acquired sales annually. Building density through acquisitions as a complement to organic growth initiatives will be a grand approach to create shareholder value in the future.
Airgas maintains its fiscal 2018 financial goals that include sales of approximately $6.8 billion on compounded annual growth rates of about 7% and 1.5% for organic and acquired sales, respectively, from the trailing twelve months ended Sep 30, 2014.
Airgas remains positive about economic expansion in the U.S., particularly of Energy & Chemicals, non-residential construction and manufacturing. Moreover, the company continues to invest in functional capabilities to serve customers and believes in the long-term viability of the U.S. economy bolstered by abundant and inexpensive energy and fantastic innovation.
Radnor, PA-based Airgas, through its subsidiaries, distributes industrial, medical and specialty gases as well as hardgoods in the U.S. The company also markets its products and services through e-Business, catalog and telesales channels.
Airgas currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the chemical-diversified industry are Celanese Corporation CE, LyondellBasell Industries N.V. LYB and Stepan Company SCL, each sporting a Zacks Rank #1 (Strong Buy).
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