The leading producer and distributor of premium alcoholic
beverages in the world,
), recently declared its board of directors' approval of a new
share repurchase program. The latest buyback scheme reflects the
company's sound financial position and favorable prospects.
The new open-ended share repurchase authorization permits
Brown-Forman to buy back a maximum of $250 million of its Class A
and Class B shares. Under the authorization, the company can
repurchase its shares in cash starting from Oct 1, 2013 through
Sep 30, 2014 either from the open market, block transactions or
through privately negotiated transactions.
As per the company, this share buyback program may be
modified, suspended, terminated or extended at any time without
any prior notice. Earlier, the company had purchased $250 million
worth of its common stock in 2011 between Mar 25 and Nov 30.
The company has a consistent track record of returning cash to
its shareholders through share repurchase and dividend payouts.
During fiscal 2013, Brown-Forman returned approximately $1.1
billion to shareholders in the form of quarterly dividends and a
$4.00 special cash dividend.
Brown-Forman has regularly paid quarterly cash dividends for
the past 67 years and has been increasing it for the last 29
years. The company's strategy of paying regular dividend and
increasing the same reflects its commitment to enhance long-term
value for shareholders. It also depicts the company's ability to
boost earnings as well as cash flows in the long run.
Brown-Forman's strong balance sheet and cash flow provide
financial flexibility in shareholder-friendly moves, product
innovation and expanding operations in the emerging markets. The
company generated operating cash flow of $537 million during
fiscal 2013, while it ended with cash and cash equivalents of
Other companies that recently announced new share repurchase
Dollar Tree, Inc.
The Walt Disney Company
We believe that dividend payments and share repurchases not
only enhance shareholders' return, but raise the market value of
the stock as well. Through dividend payouts, companies bolster
investors' confidence, persuading them to either buy or hold the
scrip instead of selling it. Looking ahead, Brown-Forman remains
confident of its growth potential, thereby raising hopes for
further enhancement of shareholder value through dividend payouts
and share buybacks.
Currently, Brown-Forman carries Zacks Rank #4 (Sell).
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