Liberty Global Ups Shareholder Returns With $2B Share Buyback

In a move to enhance shareholders' wealth, Liberty Global plc’s (NASDAQ:LBTYA) board of directors approved a new share repurchase program. The latest move reflects the company’s sound financial position and favorable prospects.

The new authorization permits Liberty Global to buy back Liberty Global Group Class A ordinary shares, Class C ordinary shares, or a combination of Class A and Class C ordinary shares, up to $2 billion. As of Oct 25, 2017, the company had approximately 221.09 billion Class A, $11.10 billion Class B and $588.31 billion Class C shares outstanding in the Liberty Global Group.

The company expects to complete the buyback program by the end of 2018. The program may be suspended or discontinued at any time, depending on a variety of factors, including market conditions and applicable law.

In third-quarter 2017, Liberty Global generated $1,229 million cash from operating activities, reflecting an increase of 17.2% year over year. Adjusted free cash flow was $715 million, reflecting an increase of 28% year over year. At the end of the reported quarter, the company had $2,110.1 million of cash and cash equivalents compared with $1,629.2 million at the end of 2016.

In fact, the company’s strong financial background enables it to undertake shareholder-friendly measures like dividends and buybacks. We believe that such initiatives not only enhance shareholders’ return but also raise the market value of a stock. Through share repurchases and dividend payouts companies bolster investors’ confidence, persuading them to either buy or hold the scrip.

Recent Stock Repurchases

On Dec 19, the board of directors of Pfizer (NYSE:PFE), Inc. announced a 6% hike in the pharma giant’s quarterly dividend for 2018 while also authorizing a new $10 billion share repurchase program. The quarterly dividend was raised from 32 cents to 34 cents, which adds up to an annual dividend of $1.36.

On Dec 15, Hyatt Hotels Corporation’s board of directors approved the repurchase of up to an additional $750 million shares. Including the latest authorization, the company has approximately $864 million shares left to be repurchased under its existing repurchase authorization. It repurchased shares worth $700 million between Jan 1 and Nov 15, 2017. In the same press release, the company discussed the sale of Hyatt Regency Monterey Hotel and Spa and Avendra LLC.

On Dec 14, JetBlue Airways' (NASDAQ:JBLU) board of directors approved a $750 million share repurchase program. The duration of the program is of two years and will commence from Jan 1, 2018. Notably, management’s new authorization comes after JetBlue completed its previous $500 million share repurchase program in September, 2017.

On Dec 7, American Tower’s (NYSE:AMT) board of directors approved a $2.0-billion stock repurchase program. The company currently has approximately $345 million shares left to be repurchased under existing repurchase authorization, approved in March 2011. In the same press release, the company also announced a quarterly cash distribution of 70 cents per share on its common stock, payable on Jan 16, 2018 to such stockholders of record as of Dec 28, 2017.

On Dec 6, T-Mobile US’s (NASDAQ:TMUS) board of directors approved a $1.5-billion share repurchase program. The program will continue till Dec 31, 2018. John Legere, President and CEO of T-Mobile US, claims that the stock buyback was backed by the company’s strong balance sheet and cash flow generation ability. Notably, in third quarter 2017, T-Mobile US generated $2,362 million of cash from operations compared with $1,740 million in the prior-year quarter. Free cash flow in the reported quarter was $921 million compared with $581 million in the year-ago quarter.

Zacks Rank and Price Performance

Currently, Liberty Global carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

With such positives, Liberty Global portrays an impressive price performance. In the past six months, the stock gained 12.8% against the industry’s decline of 3.8%.

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