On Wednesday, Nissan (OTC:NSANY) Motor Co Ltd (7201:JP) (OTC: NSANY) maintained its Equalweight rating and a price target of JPY550.00, following the company's announcement of a share buyback plan.
Nissan declared its intention to repurchase 100.2 million of its shares, equivalent to 2.5% of its outstanding shares, from Renault (EPA:RENA).
"We view this as a minor positive for the near-term share price as it is estimated to add 2.5% to EPS. 100% of the acquired shares are set to be cancelled," said the analyst.
This latest buyback is part of a larger initiative, as it follows the acquisition of 211 million shares at approximately JPY120 billion in December 2023. The cumulative value of the share buybacks will amount to around JPY180 billion.
Nissan's midterm plan, known as The Arc, was unveiled on March 25 and outlines the company's financial strategy. The plan targets a total payout ratio of 30% or more, including both dividends and share buybacks. This strategy is aligned with Nissan's broader objectives to return value to shareholders and strengthen its financial structure.
InvestingPro Insights
As Nissan Motor Co Ltd (OTC: NSANY) pushes forward with its share buyback plan, real-time data from InvestingPro highlights several financial metrics that are particularly relevant to investors. With a market capitalization of $14.9 billion and an attractive P/E ratio of just 5.47, Nissan appears to be trading at a low earnings multiple. This is further emphasized by an adjusted P/E ratio for the last twelve months as of Q3 2024, which stands even lower at 4.55.
InvestingPro Tips for Nissan underscore the company's strong financial maneuvers, including a perfect Piotroski Score of 9, indicating a healthy financial state. Moreover, management's aggressive share buybacks reflect confidence in the company's value, aligning with the strategy outlined in Nissan's midterm plan, The Arc. The plan's focus on shareholder returns is also supported by the fact that Nissan is profitable over the last twelve months, and its liquid assets exceed short-term obligations, providing a cushion for future investments or further share repurchases.
For investors interested in a deeper analysis, InvestingPro offers additional insights into Nissan's financial health and strategic positioning. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, granting access to a comprehensive array of InvestingPro Tips, of which there are 10 more listed for Nissan on InvestingPro.
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