After the stock being knocked down by a disappointing forecast
Bed Bath & Beyond Inc.
) is here with a plan to provide some solace to its shareholders
through the repurchase of $2 billion worth of shares over the next
The company highlighted that it will commence the share repurchases
under the new program following the completion of its existing
program which had about $861 million worth of shares left to be
bought back as of May 31, 2014. Moreover, the company stated that
it expects to complete the new buyback plan by fiscal 2016.
Looking back, we note that the company has constantly rewarded its
shareholders for about a decade with nearly $6.6 billion returned
in the form of buybacks. Moreover, the latest authorization is an
indication of the board's confidence in the company's long-term
growth potential, financial outlook and ability to generate cash
We believe that share repurchases not only enhance shareholder
return but raise the stock's market value as well. However, looking
from another perspective, companies' with declining share prices
and confidence in its operations may take advantage of the lower
prices to reward shareholders as well as boost earnings per share.
This strategy appears to be ideal for a company like Bed Bath &
Beyond, which has seen a 26% decline in its share price
The company believes that apart from the share repurchase programs
its strong operations provide scope for continued infrastructure
investments as well as to make the best of potential opportunities.
Bed Bath & Beyond's strong balance sheet, along with its cash
flow generation ability, provides financial flexibility to
undertake shareholder-friendly moves. The company generated cash
flow of $186.9 million and had cash and cash equivalents $536.6
million as of the end of first-quarter fiscal 2014.
Share repurchase programs are frequent among companies with a
stable cash position and healthy cash flow. Apart from Bed Bath
CR Bard Inc.
) raised buyback programs in the recent past.
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