In a bid to enhance shareholder's value,
) recently announced that its Board of Directors have agreed to
enhance its share repurchase program and hike the quarterly cash
The share repurchase authorization will rise by 57% to $4.7
billion from the initial program announced in January 2011. Under
the new program, the company has already repurchased shares of
worth $1.7 billion, with $3 billion remaining for future
repurchases. The company aims to complete the new share repurchase
program by the end of 2014.
Additionally, the board of directors also approved a 20% rise in
its quarterly cash dividend to 12 cents from 10 cents a share.
The increased dividend will be paid on October 1, 2012 to the
shareholders of record as of September 10, 2012. The annualized
dividend yield based on the increased dividend and current stock
price is 1.5%.
Previously, on May 3, 2011, CBS doubled its dividend to 10 cents
from 5 cents per share.
CBS, which competes with
), has been actively managing its cash flows by generating healthy
free cash, making prudent capital investments and enhancing
shareholders' return. The company generated free cash flow of $607
million, incurred capital expenditures of $39 million, repurchased
shares worth of $269 billion in the first quarter and ended with
cash and cash equivalents of $794 million.
The company's decision to increase its share repurchases
authorization and dividend clearly suggests the ability to generate
liquidity and its potential to improve in the long run.
CBS remains well positioned to drive revenue growth in the
coming quarters through its strategic initiatives and operating
efficiencies. Management remains optimistic and expects growth
momentum to continue in fiscal 2012 based on reverse compensation
from affiliates, strong demand of its content and online video
streaming, retransmission consent, and political advertising.
Based on better-than-expected first quarter 2012 results and
ability to generate strong free cash flow, CBS Corporation carries
Zacks #2 Rank, implying a short-term Buy rating. We also maintain
our long-term Outperform recommendation on the stock.
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