FDX - Largest Stock Buyback Plan
10-15-2013, 09:29 PM
#1
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FDX - Largest Stock Buyback Plan
As negotiations continue its pretty clear FEDEX is profitable and has plenty of cash...
FedEx Surges to Highest Since 2007 on Largest Stock-Buyback Plan
October 15, 2013 16:50 PM EDT
FedEx Corp. (FDX) surged to the highest in more than six years after the operator of the worlds largest cargo airline authorized a buyback plan of as many as 32 million shares, its biggest repurchase program ever.
The stock jumped 4.1 percent to $120.08 at the close in New York, the highest since February 2007.
The shares touched $122.50 in intraday trading for the highest price on that basis since the Memphis, Tennessee-based companys initial public offering in 1978.
Approving a buyback equivalent to 10 percent of the shares outstanding may blunt market skepticism that FedEx can meet targets in its $1.7 billion restructuring program, said Brandon Oglenski, an analyst at Barclays Plc in New York.
FedEx has been working to cut costs as customers shift toward less-expensive delivery options than overnight air shipments.
Management is signaling they can deliver those numbers and that they see real value in the equity, Oglenski said in a telephone interview.
He rates FedEx overweight, equivalent to a buy recommendation.
A buyback of 32 million shares would be equal to about $3.7 billion in stock based on the close of trading yesterday.
The move adds to the remaining 7.4 million of shares authorized for repurchase in an existing program, FedEx said in a statement.
FedEx didnt specify timing to conclude the plan. During the companys fiscal first quarter that ended Aug. 31, FedEx repurchased 2.8 million shares, according to the statement.
Historically FDX has not been a regular or aggressive buyer of its shares and so the announcement this morning is surprising,Thomas Wadewitz, an analyst at JPMorgan Chase & Co. in New York, said today in a note.
Wadewitz, who has a neutral rating on the shares, said the program may boost annual earnings per share by 75 cents to 85 cents after its completion.
The repurchase decision is credit negative, Moodys Investors Service said in a statement.
Moodys didnt change FedExs senior unsecured rating of Baa1, three levels above non-investment grade.
FedEx Surges to Highest Since 2007 on Largest Stock-Buyback Plan
October 15, 2013 16:50 PM EDT
FedEx Corp. (FDX) surged to the highest in more than six years after the operator of the worlds largest cargo airline authorized a buyback plan of as many as 32 million shares, its biggest repurchase program ever.
The stock jumped 4.1 percent to $120.08 at the close in New York, the highest since February 2007.
The shares touched $122.50 in intraday trading for the highest price on that basis since the Memphis, Tennessee-based companys initial public offering in 1978.
Approving a buyback equivalent to 10 percent of the shares outstanding may blunt market skepticism that FedEx can meet targets in its $1.7 billion restructuring program, said Brandon Oglenski, an analyst at Barclays Plc in New York.
FedEx has been working to cut costs as customers shift toward less-expensive delivery options than overnight air shipments.
Management is signaling they can deliver those numbers and that they see real value in the equity, Oglenski said in a telephone interview.
He rates FedEx overweight, equivalent to a buy recommendation.
A buyback of 32 million shares would be equal to about $3.7 billion in stock based on the close of trading yesterday.
The move adds to the remaining 7.4 million of shares authorized for repurchase in an existing program, FedEx said in a statement.
FedEx didnt specify timing to conclude the plan. During the companys fiscal first quarter that ended Aug. 31, FedEx repurchased 2.8 million shares, according to the statement.
Historically FDX has not been a regular or aggressive buyer of its shares and so the announcement this morning is surprising,Thomas Wadewitz, an analyst at JPMorgan Chase & Co. in New York, said today in a note.
Wadewitz, who has a neutral rating on the shares, said the program may boost annual earnings per share by 75 cents to 85 cents after its completion.
The repurchase decision is credit negative, Moodys Investors Service said in a statement.
Moodys didnt change FedExs senior unsecured rating of Baa1, three levels above non-investment grade.
10-16-2013, 07:41 AM
#4
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Definition of 'Buyback'
The repurchase of outstanding shares (repurchase) by a company in order to reduce the number of shares on the market. Companies will buy back shares either to increase the value of shares still available (reducing supply), or to eliminate any threats by shareholders who may be looking for a controlling stake.
The repurchase of outstanding shares (repurchase) by a company in order to reduce the number of shares on the market. Companies will buy back shares either to increase the value of shares still available (reducing supply), or to eliminate any threats by shareholders who may be looking for a controlling stake.
10-16-2013, 08:20 AM
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Reducing the number of shares is part of a plan to increase the dividend. It telegraphs that an increase is likely.
But it is also required when execs are granted stock options, unless management wants to recklessly inflate the number of shares.
Some of these shares may eventually end up back in the market.
But it is also required when execs are granted stock options, unless management wants to recklessly inflate the number of shares.
Some of these shares may eventually end up back in the market.
10-16-2013, 11:38 AM
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No --- it's not a way to hide "profits" as it isn't a true "expense" in an accounting sense, and therefore does not affect the company's "Income Statement"
It does affect the company's "Balance Sheet" by simultaneously reducing its cash in exchange for a decrease in Outstanding Shares
Theoretically it should increase the price/value of all other Outstanding Shares in the market place and will allow a greater dividend per share for any future fixed total dividend allocation.
All of those are financial/ accounting decisions associated with the company goal of increasing shareholder wealth --- but also help managers who have been awarded past stock options, or have other parts of their compensation based on stock price performance.
Most importantly, it signals that the company is generating a significant amount of cash or is at least not worried that it doesn't have enough cash in its Current Assets account -- and certainly does not have a need to issue more stock or bonds to raise cash.
Additionally, it shows the leadership has decided NOT to keep this cash on its balance sheet as a Current (liquid) Asset or deploy this cash on other alternatives --- such as long term Capital Improvements/Investments.
Bottom line message --- the companies finances are very healthy and we shouldn't accept any type of "woe is us" stories during negotiations
Financial Statements are how companies keep score --- and this action proves that our collective efforts are proving very profitable
The stockholders and managers are clearly benefitting --- should the pilot group??
It does affect the company's "Balance Sheet" by simultaneously reducing its cash in exchange for a decrease in Outstanding Shares
Theoretically it should increase the price/value of all other Outstanding Shares in the market place and will allow a greater dividend per share for any future fixed total dividend allocation.
All of those are financial/ accounting decisions associated with the company goal of increasing shareholder wealth --- but also help managers who have been awarded past stock options, or have other parts of their compensation based on stock price performance.
Most importantly, it signals that the company is generating a significant amount of cash or is at least not worried that it doesn't have enough cash in its Current Assets account -- and certainly does not have a need to issue more stock or bonds to raise cash.
Additionally, it shows the leadership has decided NOT to keep this cash on its balance sheet as a Current (liquid) Asset or deploy this cash on other alternatives --- such as long term Capital Improvements/Investments.
Bottom line message --- the companies finances are very healthy and we shouldn't accept any type of "woe is us" stories during negotiations
Financial Statements are how companies keep score --- and this action proves that our collective efforts are proving very profitable
The stockholders and managers are clearly benefitting --- should the pilot group??
Last edited by DLax85; 10-16-2013 at 11:54 AM.
10-16-2013, 06:28 PM
#8
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Position: B-52 IP / Delta Poolie
Posts: 188
Some people may draw the conclusion that when a company increases dividends or buys back stock, it is doing so because it has no better options with which to invest that cash. In other words, growth might be slowing for the company.
10-18-2013, 01:03 AM
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Posts: 597
The vanguard website has all the info.
To see how you are doing and to see limits it is all in your vanguard online account.Log on to your vanguard account- open plan summary, then in the lower right click on retirement plan contribution limits. It explains and gives gives numbers.
To see your contributions to date click on view my history, statements and forms, then click on my contributions, then open each account Money purchase plan and retirement savings plan. Depending on your age as mentioned in other post what your limits are.
To see how you are doing and to see limits it is all in your vanguard online account.Log on to your vanguard account- open plan summary, then in the lower right click on retirement plan contribution limits. It explains and gives gives numbers.
To see your contributions to date click on view my history, statements and forms, then click on my contributions, then open each account Money purchase plan and retirement savings plan. Depending on your age as mentioned in other post what your limits are.
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