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Buyback activity appears to be picking up momentum this week with companies starting to announce their Q2 earnings. There were 14 new buyback announcements this week and incidentally four of these announcements were by banks (BLFY, RMBI, MGYR and CBNK). AutoNation (AN) and cloud security company F5 Inc. (FFIV) announced a $1 billion additional buyback each representing 14.8% and 10.7% of their market caps at announcement respectively.
AutoNation is one of the largest auto retailers in the United States that also sells auto parts and offers services such as collision repair and maintenance. AN continues to expand its business by opening new AutoNation USA stores, their sales and service centre for used vehicles. As of July 18, 2022, AutoNation operates 314 locations in the United States spread across 18 states and 118 cities.
AN reported Q2 2022 results with total revenue of $6.9 billion, a 1.6% year-over-year drop driven by a 14% decline in new vehicle revenue. Used vehicles saw revenue growth of 13% and after-sales revenue grew 9% year-over-year. Despite the decline in their top line, gross margins were higher and EPS was significantly higher.
The company reported net income of $376 million or $6.48 per share, a 34% increase year-over-year and an all-time quarterly earnings record. Vehicle sales generated 38% of gross profit whereas their resilient parts & service business contributed 34% of gross profit. Cash flow generation continued to remain strong with cash from operations totaling nearly $900 million for the first half of the year. The stock also looks cheap with a forward EV/EBITDA below 5.
The company has $3.4 billion of net debt and some of it is related to leases or loans on its cars. It also holds $1.9 billion of inventory and $587 million in capital leases. At first glance one would think that it may make sense to pay down some of that debt but given how well the company is performing and how cheap it is, a buyback makes a lot of sense.
Welcome to edition 17 of Buyback Wednesdays, a weekly series that tracks the top stock buyback announcements during the prior week. The companies in the list below are the ones that announced the largest buybacks as a percentage of their market caps. They are not the largest buybacks in absolute dollar terms. A word of caution. Some of these companies could be low-volume small-cap stocks with a market cap below $2 billion.
Top 5 Stock Buyback Announcements
1.AutoNation, Inc. (AN): $111.05
On July 21, 2022, the Board of Directors of this automotive retailer approved an additional share repurchase program authorizing the company to repurchase up to $1 billion of its class A common stock, representing nearly 14.8% of its market cap at announcement.
| Market Cap: $6.39B | Avg. Daily Volume (30 days): 728,723 | Revenue (TTM): $26.58B |
| Net Income Margin (TTM): 5.59% | ROE (TTM): 57.41% | Net Debt: $5B |
| P/E: 5.11 | Forward P/E: 5.35 | EV/EBIDTA (TTM): 4.97 |
2. F5 Networks, Inc. (FFIV): $159.31
On July 25, 2022, the Board of Directors of this multi-cloud application security and delivery solutions provider approved an additional share repurchase program authorizing the company to repurchase up to $1 billion of its class A common stock, equal to nearly 10.7% of its market cap at announcement.
| Market Cap: $9.20B | Avg. Daily Volume (30 days): 583,601 | Revenue (TTM): $2.65B |
| Net Income Margin (TTM): 13.19% | ROE (TTM): 15.9% | Net Cash : $205.3M |
| P/E: 27.14 | Forward P/E: 13.53 | EV/EBIDTA (TTM): 16.38 |
3. WSFS Financial Corporation (WSFS): $44.22
On July 25, 2022, the Board of Directors of this financial services company approved a new share repurchase program authorizing the company to repurchase up to $277 million of its class A common stock equal to nearly 10% of its market cap at announcement.
| Market Cap: $2.77B | Avg. Daily Volume (30 days): 253,761 | Revenue (TTM): $734.21M |
| Net Income Margin (TTM): 28.62% | ROE (TTM): 9.82% | Net Cash: $1.72B |
| P/E: 9.75 | Forward P/E: N/A | EV/EBIDTA (TTM): N/A |
4. Blue Foundry Bancorp (BLFY): $11.92
On July 20, 2022, the Board of Directors of this holding company for Blue Foundry Bank approved a new share repurchase program authorizing the company to repurchase up to $33.3 million of its class A common stock equal to nearly 10% of its market cap at announcement.
| Market Cap: $314.40M | Avg. Daily Volume (30 days): 878,916 | Revenue (TTM): $50.61M |
| Net Income Margin (TTM): -69.25% | ROE (TTM): -11.2% | Net Debt: $110M |
| P/E: N/A | Forward P/E: 400 | EV/EBIDTA (TTM): N/A |
5. Richmond Mutual Bancorporation, Inc. (RMBI): $13.75
On July 21, 2022, the Board of Directors of this bank approved a new share repurchase program authorizing the company to repurchase up to $16 million of its class A common stock equal to nearly 9.9% of its market cap at announcement.
| Market Cap: $160.42M | Avg. Daily Volume (30 days): 7,111 | Revenue (TTM): $44.83M |
| Net Income Margin (TTM): 27.44% | ROE (TTM): 7.65% | Net Debt: $162.58M |
| P/E: 13.15 | Forward P/E: N/A | EV/EBIDTA (TTM): N/A |
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