Lowe's Announces New Share Buyback Program To Boost Returns

In a bid to enhance shareholders' value, Lowe's Companies, Inc. (NYSE:LOW) announced a new $5 billion share buyback plan. Notably, the new program is in addition to the remaining repurchase authorization of $2.1 billion as of Nov 3, 2017. However, the new share repurchase program does not have any expiry date and is expected to be made in the open market or via private off-market transactions per the Securities and Exchange Commission’s guidelines.

Furthermore, management declared a quarterly cash dividend of 41 cents per share payable on Feb 7, 2018, to shareholders of record as of Jan 24. This dividend reflects a yield of 4.6% on the stock’s closing price on Jan 26.

Impressively, the company maintains a shareholder-friendly policy as evident from its efforts to boost shareholders’ wealth. During the third quarter of fiscal 2017, Lowe’s kept its promise of returning surplus cash to stockholders as it repurchased shares worth $500 million and distributed $344 million as dividends. Management had earlier notified that it expects to buy back shares worth $3.5 billion in fiscal 2017.

These above-mentioned initiatives reflect Lowe’s stable liquidity position. In the last reported quarter, the generated operating cash flow of $5.4 billion and free cash flow of $4.6 billion.

Apart from Lowe’s, The Home Depot, Inc. (NYSE:HD) has recently announced such initiatives as well. Last year in December, Home Depot announced a $15 billion share buyback plan in exchange of its previous authorization.

Lowe’s shares have gained 35.2% in the past three months, outperforming the industry’s growth of 26.8%.

We believe the improving job scenario, housing market recovery, merchandising initiatives and post hurricane construction activities along with efforts to enhance omni-channel capabilities bode well for Lowe’s.

Looking For Solid Retail Picks, Check These

Better-ranked stocks in the Retail sector include Zumiez Inc. (NASDAQ:ZUMZ) and The Buckle, Inc. (NYSE:BKE) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Zumiez, with a long-term earnings growth rate of 18%, has pulled off an average positive earnings surprise of 22.2% in the trailing four quarters.

Buckle has delivered an average positive earnings surprise of 3.8% in the last four quarters.

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