) touched a new 52-week high during yesterday's trading session
after the high-end fashion retailer announced a new share
repurchase program. The authorization shows Nordstrom's financial
strength as reflected in the company recently posted
better-than-expected second-quarter fiscal 2014 results.
Nordstrom's board of directors approved a new share repurchase
program to buyback shares to the tune of $1 billion through Mar 1,
2016. This new authorization adds to the company's previous share
repurchase authorization that expires on Mar 1, 2015 and still has
an amount of $323 million remaining under it.
This brings the company's total share repurchase authorization
to $1.323 billion. The company plans to fund the newly announced
share buybacks by using the available cash on hand.
The strength of Nordstrom's business model is reflected in its
strong cash generation capabilities and its commitment to return
value to its shareholders. We believe that continued share buybacks
will increase investor confidence on the stock.
Nordstrom's strong balance sheet and cash flows provide
financial flexibility in matters of shareholder friendly moves as
well as store and online business expansions. During the first two
quarters of fiscal 2014, it shelled out $326 million on share
repurchases and $125 million on cash dividends. Cash and cash
equivalents stood at $772 million at the end of second quarter. We
remain encouraged by Nordstrom's strong cash position and its
ability to service its long-term debts.
Other companies that recently announced share repurchase
programs include Varian Medical Systems, Inc. (
), Briggs & Stratton Corp. (
) and Cardinal Health, Inc. (
We believe that dividend hikes and share repurchases not only
enhance shareholder return, but raise the market value of a stock.
Through dividend raises, companies bolster investor confidence,
persuading them to either buy or hold the scrip instead of selling
these. Looking ahead, the company remains confident of its growth
potential, suggesting enhanced value for shareholders via dividend
payout as well as share buybacks.
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VARIAN MEDICAL (VAR): Free Stock Analysis
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