Brown-Forman's New Buyback Plan to Boost Shareholder Returns

Brown-Forman Corporation BF.B has been earnestly focused on returning value to shareholders, which is a key aspect of its growth strategy. The company has a tradition of returning cash to shareholders through regular dividend payouts and share repurchases. Reaffirming this commitment, the company has approved a new share repurchase program that also reflects its sound financial position and favorable prospects.

Under the latest authorization, Brown-Forman will buy back nearly $200 million worth of its Class A and Class B shares, starting from Jul 13, 2018, through Jul 12, 2019. The purchases will be made using cash on hand in the open market or through block transactions and privately negotiated transactions.

The company holds the rights to modify, suspend, terminate or extend the program at any time without prior notice.

This news did not have a major impact on the company’s share price. However, this Zacks Rank #3 (Hold) stock has surged 33.9% in the past year against the industry’s decline of 0.5%.

Brown-Forman’s strong balance sheet and cash flow provide it with the financial flexibility to make shareholder-friendly moves as well as scope for product innovation and expansion of operations in the emerging markets. The company had cash and cash equivalents of $239 million as of the end of fiscal 2018.

Further, the company’s five-for-four stock split was paid on Feb 28, 2018. In connection with the stock split, the company also paid a special dividend of $1 on split adjusted Class A and Class B stock on Apr 23. Additionally, management approved a quarterly cash dividend of 15.8 cents per share on a split-adjusted basis, which was paid on Apr 2. Moreover, the company is keen on delivering greater long-term returns to shareholders.

Looking for Some Promising Stocks? Check These

Some better-ranked stocks in the Consumer Staples space include The Boston Beer Company, Inc. SAM, Helen of Troy Limited HELE and MEDIFAST, Inc. MED, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Boston Beer has rallied 46.9% in the last three months. Additionally, the company has long-term earnings growth rate of 9.5%.

Helen of Troy has increased nearly 32.1% in the last three months. The company has long-term earnings growth rate of 6.1%.

MEDIFAST has surged 60.8% in the past year. Moreover, the company has long-term earnings growth rate of 15%.

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Brown-Forman Corporation (BF.B) : Free Stock Analysis Report
 
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