Shoe Carnival (NASDAQ:SCVL), Mondelez's (NASDAQ:MDLZ), and Kroger (NYSE:KR) announced major buybacks in December that should help support their price action over time. Today's question is whether these stocks will be classified as Buys, Sells, or Holds for 2025, and the answer is Buy, if for differing reasons with each stock.
Here’s a look at why investors should be interested in them.
Shoe Carnival: Undervalued Small-Cap With a Solid Dividend
Shoe Carnival faces headwinds in 2024, like all retailers, but still generates reasonably stable results and sufficient cash flow to sustain its capital return outlook. That includes up to $50 million in share repurchases, about 5% of the market cap, but that is not why this stock is a Buy. The company’s buybacks are a backstop to share-based compensation and are unreliable as capital returns. The highlights from 2024 include no repurchases, a moderately higher share count, and significantly improved shareholder value tied to operations and acquisitions. It’s a buy because of its balance sheet and dividend.
The company’s operations and balance sheet allow it to make acquisitions such as Rogan’s, which added 28 or about 7% more stores to the footprint. At the end of FQ3, the balance sheet highlights included increased cash, current, and total assets partially offset by increased liabilities. The net result was an 11% increase in shareholder equity and total leverage of less than 0.8x equity. The cash flow and balance sheet also allow for a healthy and reliable dividend worth 1.6% in yield with shares near $34.25. The dividend is less than 20% of the earnings outlook, and the distribution is growing. The company has increased for 12 consecutive years and is on track to make another double-digit increase in early 2025. 
Mondelez Authorizes $9 Billion Repurchase Authorization: Share Count Is Falling
Mondelez's $9 billion repurchase authorization is more of a meal for investors. This stock is a Buy for its dividend and buybacks, which reduced the count by 1.9% year-over-year for Q3 and by 1.7% year-to-date. The new authorization replaces the old and is sufficient to keep the company buying shares at the current pace for several quarters. Capital return, including dividends, is $2.9 billion for the first nine months of the year and will top $3 billion by the end of the year.
The dividend is attractive. The stock yields over 3%, trading at 17x, which is more than double the broad market average at a value and a high-yielding value compared to peers. The company is also growing its distribution at a double-digit rate, which it can sustain due to core growth and the declining share count. Regarding the balance sheet, the company uses debt to improve cash flow, but it is well-managed at only 0.6x equity, leaving it in a healthy position.
Analysts agree that this stock is a value. The consensus estimate has fallen modestly since earlier in the year but is relatively steady compared to last year and earlier in 2024, suggesting a 30% discount with the stock trading near $59.50. 
Kroger Buys Back Shares! Albertson’s Merger Quashed
Kroger could not buy Albertsons (NYSE:ACI), but it doesn’t matter. The company’s financial position was robust and only strengthened as the process extended. The net result is that Kroger had built an incredible cash position preparing for the acquisition and is now using the cash to buy back shares.
The company authorized a $7.5 billion buyback plan, worth about 17% of the market cap, with $5.5 allotted for an accelerated buy completed in mid-December.
The remainder is worth a mid-single digit share amount and is likely to be executed in 2025 with cash on hand and then later increased.