In line with its shareholder-friendly moves,
The Kroger Co.
) recently announced a new share buyback program worth $500.0
million. This will replace the previously closed $1 billion share
Kroger's focus on boosting shareholder value is evident from its
sustained dividend payouts and share repurchases. During
first-quarter fiscal 2014, Kroger bought back 25.7 million shares
for an aggregate amount of $1.1 billion.
The company has returned nearly $11 billion to its stockholders via
buy backs since the beginning of 2000. Moreover, the company's
healthy free cash flow generating ability has facilitated it to
return over $1.9 billion to stakeholders via dividends and share
repurchases in the last 4 quarters.
Going forward, Kroger aims to attain net debt to EBITDA ratio in
the range of 2.00-2.20 by mid to end of 2015. Consequently,
management anticipates no significant repurchases in the remainder
of the current fiscal. In the last reported quarter, Kroger's
trailing-12 months' net total debt to adjusted EBITDA ratio was
2.42 compared with 1.85 in the prior-year period.
Concurrent with the share repurchase declaration, the company
announced a quarterly cash dividend of 16.5 cents a share. This
will be payable on Sep 1, 2014, to stockholders of record as on Aug
Kroger is actively managing its capital, returning much of its free
cash to shareholders via share buybacks and dividends, and
deploying cash flows in opening new stores and facilitating entry
into newer markets. The company expects to enhance shareholders'
return by approximately 10% to 13.5% in the long run, including 2%
to 2.5% through dividends.
These investor-friendly moves further raise the market value of the
stock. It bolsters investors' confidence in the company, thereby
persuading them to either buy or hold the scrip instead of selling
it. Looking ahead, Kroger remains confident of its growth
Kroger's customer-centric business model also provides a strong
value proposition to consumers, and makes it likely to deliver
higher earnings. Additionally, having a dominant position among the
nation's largest grocery retailers enables the company to sustain
growth in top and bottom lines, expand its store count and boost
Kroger currently carries a Zacks Rank #3 (Hold). Other
better-ranked retail stocks in the industry include
Citi Trends, Inc.
Sprouts Farmers Market, Inc.
), both carrying a Zacks Rank #1 (Strong Buy), and
Restoration Hardware Holdings, Inc.
) with a Zacks Rank #2 (Buy).
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