Stock buyback activity remained muted for a second week in a row with just 7 new buyback announcements. The ODP Corporation (ODP) topped our list this week with a $600 million share buyback announcement representing around 35% of its market cap at announcement. ODP’s buyback includes the launch of a $300 million modified “Dutch auction” cash tender offer.
The other significant buyback announcements were by Unity Software (U) and M&T Bank Corporation (MTB), announcing $2.5 billion and $3 billion share repurchase plans respectively. 3D game engine developer Unity Software decided to acquire ironSource (IS) last week in a $4.4 billion all-stock deal at a significant 74% premium to the 30-day average price of ironSource before the deal was announced. The buyback will commence once the deal is completed and is expected to offset some of the dilution from this all-stock deal.
The ODP Corporation is an American office supply holding company headquartered in Boca Raton, Florida. The company’s portfolio of brands includes Office Depot, OfficeMax, Grand & Toy, Ativa, TUL, Foray, Realspace, and DiVOGA.
In the age of Amazon.com and online shopping, it is not surprising Office Depot and Staples were seeing declining sales and the companies attempted to merge in 2015 before the deal was blocked by the FTC. Staples went private in 2017 and once again last year attempted to buy the physical stores business of ODP Corporation. This was rather unusual in the middle of a pandemic and especially considering ODP continues to close physical stores and last quarter saw a 9% increase in revenue in its Business Solutions Division, which was the business-to-business division, Staples was not interested in acquiring.
Overall revenue has been shrinking at ODP but to the company’s credit, it managed to increase earnings in three of the last four quarters. The company’s strongest quarter, the back-to-school season, is ahead of it in Q3. The company ended Q1 with $557 million in cash, $199 in debt and $714 million in capital leases. The stock appears very cheap with a forward EV/EBITDA of less than 5, although both revenue and earnings are expected to decline this year based on consensus analyst estimates. I can see why the company wants to buyback its stock but I would prefer they focus on either growing the top line or improving lackluster margins.
Welcome to edition 16 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.The ODP Corporation (ODP): $35.9
On July 18, 2022, the Board of Directors of this business services and supplies provider approved a new share repurchase program authorizing the company to repurchase up to $600 million of its class A common stock, representing nearly 35% of its market cap at announcement.
| Market Cap: $1.55B | Avg. Daily Volume (30 days): 454,165 | Revenue (TTM): $8.47B |
| Net Income Margin (TTM): -2.43% | ROE (TTM): 10.37% | Net Debt: $356M |
| P/E: 8.98 | Forward P/E: 8.12 | EV/EBIDTA (TTM): 5.12 |
2. Unity Software Inc. (U): $35.65
On July 13, 2022, the Board of Directors of this leading platform for creating and operating real-time 3D (RT3D) content approved a new share repurchase program authorizing the company to repurchase up to $2.5 billion of its class A common stock, equal to nearly 25.73% of its market cap at announcement.
| Market Cap: $10.52B | Avg. Daily Volume (30 days): 11,511,689 | Revenue (TTM): $1.20B |
| Net Income Margin (TTM): -50.4% | ROE (TTM): -27.52% | Net Debt : $10M |
| P/E: N/A | Forward P/E: N/A | EV/EBIDTA (TTM): -24.29 |
3. M&T Bank Corporation(MTB): $164.71
On July 19, 2022, the Board of Directors of this financial holding company approved a new share repurchase program authorizing the company to repurchase up to $3 billion of its class A common stock equal to nearly 10.18% of its market cap at announcement.
| Market Cap: $28.03B | Avg. Daily Volume (30 days): 878,916 | Revenue (TTM): $5.99B |
| Net Income Margin (TTM): 29.61% | ROE (TTM): 10.34% | Net Cash: $35.6B |
| P/E: 11.93 | Forward P/E: 12.12 | EV/EBIDTA (TTM): N/A |
4. The OLB Group, Inc. (OLB): $1.17
On July 13, 2022, the Board of Directors of this payment facilitator and commerce service provider approved a new share repurchase program authorizing the company to repurchase up to $1.18 million of its class A common stock equal to nearly 6.8% of its market cap at announcement.
| Market Cap: $15.88M | Avg. Daily Volume (30 days): 7,594,510 | Revenue (TTM): $23.27M |
| Net Income Margin (TTM): -22.92% | ROE (TTM): -20.24% | Net Cash: $500K |
| P/E: N/A | Forward P/E: N/A | EV/EBIDTA (TTM): -9.58 |
5. SG Blocks, Inc. (SGBX): $1.63
On July 15, 2022, the Board of Directors of this construction and engineering company approved a new share repurchase program authorizing the company to repurchase up to $850,000 of its class A common stock equal to nearly 4.16% of its market cap at announcement.
| Market Cap: $19.93M | Avg. Daily Volume (30 days): 104,196 | Revenue (TTM): $37.76M |
| Net Income Margin (TTM): -25.2% | ROE (TTM): -21.36% | Net Cash: $8.8M |
| P/E: N/A | Forward P/E: N/A | EV/EBIDTA (TTM): -3.59 |
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