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Pep Boys - Manny, Moe & Jack Message Board

  • shorthighcoverlower shorthighcoverlower Jan 9, 2010 9:56 AM Flag

    stock buyback in the works? Danin?

    Danin: what are the chances that PBY will initiate a stock buyback plan to take advantage of the stock's low price and to reduce the amount of shares outstanding so earnings could be allocated through a smaller base? A 20% drop in outstanding shares would certainly have an accretive impact on earnings.I would think that a $100 million program to buy back shares in the open market would be approriate, now that PBY has demonstrated three quarters of consecutive earnings improvement.mark krieger

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    • About a year ago I posted that PBY should eliminate their dividend of 27 cents then when stock was below $3 and they could have bought back 10% of the shares with what they were giving out in dividend. Now the stock has more than tripled. As I have said before, for whatever reason, I believe there is a "conspiracy of sorts" to keep the stock price down. Everytime O'Dell opens his mouth, the stock price drops. These guys including BOD's are sandbagging cheap options. The one concern I have is that management or BOD's have made no vote of confidence in PBY for about a year now. Not one of them has bought shares in the open market. They want us to buy the stock based on their 3 year plan....but are unwilling to do so themselves. If these guys were to start buying shares, PBY stock would jump a buck or two overnight.
      As for buying back shares now, most evidence from about a dozen companies I follow that have bought back shares....they all overpaid and their stock is now less than what they paid for it. There is tons of analysis on that subject. Stock buybacks aren't what they used to be. PBY's current debt ratios are also the highest in the industry....but have been greatly improving.....and a stock buyback would certainly not help. This is the main negative often mentioned with PBY stock. They cannot buyback stock, retire debt at a discount (bond repurchases) and expand 40 stores this year and 80 next year. The current dividend will probably go soon as they use that to fund growth (which is smart).
      Now, if they could somehow do $200-300 million in sale might happen. DaninFW

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