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Buyback activity followed a similar pattern last week with only 6 companies announcing their buybacks. Orchid Island Capital (ORC) topped our list with a buyback that represents 13.8% of its market cap, followed by a $14 billion additional buyback by Lockheed Martin Corporation (LMT) which represents around 12.2% of its market cap at announcement. LMT also increased its quarterly dividend by 7% to $3.00 per share.
The $1.13 billion buyback by Indian software services company, Infosys Limited (INFY) stood out last week. Infosys is a global consulting and IT services company that is present in 50-plus countries and has over 1,800 clients. Infosys continued its acquisition spree this year to strengthen its presence across Europe, Germany, and Northeast Asia.
On October 13, 2022, Infosys announced a buyback and declared a quarterly dividend of $0.20 per share. This is the fourth buyback announced by the company since its IPO in 1993. The first buyback was announced on 16 Aug 2017 through a tender offer. With a payout ratio of 59%, the company has additional room to increase its dividend or allocate more capital to buybacks in the future.
Infosys reported its Q2 FY ’23 financial results with revenue of $4.55 billion, a 14% Y/Y increase. Infosys’ digital segment contributes nearly 61.8% of its overall revenue and grew by 31.2% year-on-year in constant currency. The company’s balance sheet continues to remain strong with $2.47 billion in net cash. Free cash flow for the quarter was $589 million. ROE increased by 1% year-on-year to 30.7%. Net income margin of 16.90% is impressive considering gross profit margin is just 30.20%. Infosys’ earnings have grown by 5.5% per year over the past 5 years. Employee count last quarter increased by approximately 10,000 to 345,000. Attrition declined by 2.5% this quarter.
Infosys signed 27 large deals in Q2 with a Total Contracting Value of $2.74 billion. Shares of Infosys fell 27.6% YTD and the stock trades at a forward PE of 25.19 and a forward EV/EBITDA of 17.24. Pricing power, a reversal in currency tailwinds and a global recession reducing the need for consulting services are all challenges the company is likely to face in the near future.
Welcome to edition 29 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. Orchid Island Capital, Inc. (ORC): $9.66
On October 12, 2022, the Board of Directors of this specialty finance company approved an additional share repurchase program authorizing the company to repurchase up to 4.3 million shares of its class A common stock equal to nearly 13.8% of its market cap at announcement.
| Market Cap: $335.58M | Avg. Daily Volume (30 days): 1,750,749 | Revenue (TTM): -$209.71M |
| Net Income Margin (TTM): N/A | ROE (TTM): -42.90% | Net Debt: $3.39B |
| P/E: N/A | Forward P/E: N/A | EV/EBIDTA (TTM): – |
2. Lockheed Martin Corporation (LMT): $432.32
On October 18, 2022, the Board of Directors of this global security and aerospace company approved an additional share repurchase program authorizing the company to repurchase up to $14 billion of its class A common stock equal to nearly 12.2% of its market cap at announcement.
| Market Cap: $105.35B | Avg. Daily Volume (30 days): 1,198,770 | Revenue (TTM): $64.17B |
| Net Income Margin (TTM): 7.33% | ROE (TTM): 52.39% | Net Debt: $9.87B |
| P/E: 22.51 | Forward P/E: 13.91 | EV/EBIDTA (TTM): 16.11 |
3. Navigator Holdings Ltd. (NVGS): $12.48
On October 18, 2022, the Board of Directors of this oil and gas seaborne transportation company approved a new share repurchase program authorizing the company to repurchase up to $50 million of its class A common stock, representing nearly 5.1% of its market cap at announcement.
| Market Cap: $917.13M | Avg. Daily Volume (30 days): 165,895 | Revenue (TTM): $478.73M |
| Net Income Margin (TTM): 1.47% | ROE (TTM): 0.82% | Net Debt: $762.68M |
| P/E: N/A | Forward P/E: N/A | EV/EBIDTA (TTM): 9.78 |
4. BCB Bancorp, Inc. (BCBP): $17.89
On October 17, 2022, the Board of Directors of this bank approved an additional share repurchase program authorizing the company to repurchase up to 417,650 shares of its class A common stock equal to nearly 2.5% of its market cap at the announcement.
| Market Cap: $293.11M | Avg. Daily Volume (30 days): 46,931 | Revenue (TTM): $108.47M |
| Net Income Margin (TTM): 36.13% | ROE (TTM): 14.78% | Net Cash: $70.03M |
| P/E: 7.88 | Forward P/E: N/A | Price/Tangible Book: 1.17 |
5. Infosys Limited (INFY): $18.07
On October 13, 2022, the Board of Directors of this IT services company approved a new share repurchase program authorizing the company to repurchase up to $1.13 billion of its class A common stock, equal to nearly 1.5% of its market cap at announcement.
| Market Cap: $76.55B | Avg. Daily Volume (30 days): 12,448,893 | Revenue (TTM): $17.53B |
| Net Income Margin (TTM): 16.9% | ROE (TTM): 30.66% | Net Cash: $2.47B |
| P/E: 25.44 | Forward P/E: 25.19 | EV/EBITDA: 17.85 |
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