Harman International Industries Inc.
) jumped 4.62% to close at $53.62 on Jun 27, 2013 after its board
of directors announced an additional $200 million share buy-back
program. The company already has $70.7 million left in the
previous buy-back program, which was worth $200 million. The
program was announced in Oct 2011.
Harman also announced that it will double its annual dividend
payment to $1.20 for fiscal 2014. Harman will increase its
quarterly dividend of 15 cents per share to 30 cents from the
coming fiscal year. The company will pay the cash dividend on Sep
The shareholder-friendly move comes on the heels of strong
third-quarter earnings reported by Harman. The company reported
third-quarter earnings of 79 cents, which not only beat the Zacks
Consensus Estimate by 16 cents but increased 6.8% from the
previous-year quarter. The company's earnings benefited from
lower share count.
However, revenues decreased 3.1% year over year. The decline
was primarily due to weak performance across Infotainment and
Lifestyle segments. Macro-economic headwinds and slowdown in the
automotive sector in Europe had a significant negative impact on
Harman's top line in the quarter.
During the quarter, Harman won a number of awards from
customers such as
), Lexus, Kia, Mercedes and Ferrari. The company also upped its
Year-to-date, Harman's shares have jumped 16.9% compared to a
10.3% jump in S&P 500. In such a scenario, the additional
share buy-back program and the scheduled increase in dividend
will definitely boost shareholders' confidence. As of Mar 31,
2013, Harman had cash and cash equivalents of $422.2 million and
long-term debt of $262.6 million.
Moreover, the company expects its restructuring program to
deliver $30 million - $35 million in annualized savings starting
fiscal 2014. Apart from this, Harman's new manufacturing
capacities, growing product pipeline, solid patent portfolio, new
awards as well as the launch of new products are expected to
boost top line and profitability over the long term. Moreover,
Harman continues to expand due to its partnership with companies
Meanwhile, Harman faces tough competition from
), which may hurt its profitability, going forward. We expect the
stock to remain range-bound due to the sluggish macroeconomic
environment, particularly in Europe in the near term.
Currently, Harman has a Zacks Rank #3 (Hold).
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