Buyback Wednesdays – Home Depot Plans $15 Billion Buyback

Buyback activity slowed down last week with only 12 companies announcing buybacks. The company that topped our list with a 17% buyback was Winnebago Industries (WGO), manufacturer and seller of recreational vehicles. WGO announced a $350 million share repurchase on August 17, 2022. Elevated gas prices combined with a weakening housing market is likely to have a negative impact on RV sales in the near future. The stock is undeniably cheap with an EV/EBITDA below 4, which is probably the reason the company is planning on buying back shares. Interestingly, Thor Industries (THO), the giant RV manufacturer also announced an additional buyback of $450 million in June this year, representing around 10.5% of its market cap. We wrote about Thor in our Buyback Wednesdays post a couple of months ago.

General Motors (GM) also announced a $1.7 billion additional buyback representing around 3% of its market cap at announcement.

The other significant buyback of the week was by Home Depot (HD). Home Depot announced a huge buyback of $15 billion representing around 4.5% of its market cap at announcement. This replaces the previous $20 billion repurchase authorization announced by the company in May, 2021. The company has repurchased nearly 11% of its shares since 2018. Home Depot acquired its old subsidiary, HD Supply Holdings in 2020 and we had wrote about it in our Merger Arbitrage Mondays post titled Merger Arbitrage Mondays – Home Depot Brings HD Supply Holdings Back Into The Fold.

When announcing Q2, 2022 results on August 16, 2022, the company’s new CEO and President Ted Decker stated,

“In the second quarter, we delivered the highest quarterly sales and earnings in our company’s history,”

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