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Buyback activity edged up a little with 9 companies announcing buybacks last week. Synopsys (SNPS) announced an additional buyback of $1.5 billion representing around 3% of its market cap at announcement. The company beat earnings expectations in each of the last four quarters and net margin of 20.86% and return on equity of 19% were higher than prior quarters. Synopsis has been consistently announcing buybacks but the net impact on shares outstanding has been minimal. The company recently entered into accelerated share repurchase agreements, which will hopefully put a bigger dent in their outstanding shares. The company expects to grow its annual revenue by ~20% and pass the $5B milestone by the end of the year.
PotlatchDeltic Corporation (PCH), a REIT that owns timberlands, also announced a $200 million share repurchase program representing around 6% of its market cap. The company’s stock is down 15% over the last year. A 20% drop in lumber prices impacted the company’s Q2 2022 results. The wood products segment generated adjusted EBITDA of $107 million in the second quarter, compared to $150 million in the first quarter. The real estate segment however, managed another strong quarter with adjusted EBITDA of $22 million. The company has been a successful bidder on three bolt-on timberland transactions this year apart from the ongoing CatchMark merger. The three bolt-on transactions add approximately 46,000 acres to the company’s ownership in Mississippi and Arkansas. High mortgage rates and low home builder confidence are likely to put downward pressure on timber prices and impact PCH’s prospects in the near future.