In order to enhance shareholder value, the board of directors of Briggs & Stratton Corporation (BGG), declared an increase of $50 million to the company’s share repurchase authorization. Moreover, Briggs & Stratton extended the expiry of the buyback to Jun 2016.
The stock price rose around 3% and closed at $22.73 at the end of trading on Jan 22 after this announcement. The share repurchase will help the company offset any potentially dilutive impacts of share-based compensation under its incentive compensation plan.
Since Aug 2011, Briggs & Stratton has bought back about $93 million worth of its common stock. With the latest announcement, the company currently has $57 million available for repurchase as of Jan 22, 2014.
Notably, Briggs & Stratton also facilitates returns to shareholders through dividends. Management has recently approved a regular quarterly cash dividend of 12 cents per share, which translates to an annualized dividend of 48 cents per share. The dividend yield based on the new payout and the last closing market price is 2.1%.
As of the first-quarter fiscal 2014-end, Briggs & Stratton’s cash and cash equivalents were $115 million up from $101.6 million as of Sep 30, 2012. Briggs & Stratton could repurchase shares using the available cash, in the open market or in private transactions, depending upon market conditions. The company’s strong financial position and healthy cash flow will likely enable it to pursue further buybacks.
For fiscal 2014, Briggs & Stratton expects net income to range between $50 million and $62 million and earnings per share within $1.04 and $1.28. Net sales for fiscal 2014 is expected to be in the band of $1.88 billion and $2.03 billion.
Briggs & Stratton remains committed to its restructuring and cost reduction plans. However, the ongoing global economic uncertainty and adverse weather conditions may affect the company’s performance.
Milwaukee, Wis.-based Briggs & Stratton is the world's largest producer of gasoline engines for outdoor power equipment. Its wholly owned subsidiary, Briggs & Stratton Power Products Group LLC, is North America's top manufacturer of portable generators and pressure washers. This subsidiary is also a leader in the designing, manufacturing and marketing of standby generators, and lawn, garden and turf care products through its popular brands.
Briggs & Stratton currently has a Zacks Rank #3 (Hold). However, other better-ranked stocks worth a look in the industrial product sector include Altra Industrial Motion Corp. (AIMC), ARC Document Solutions, Inc. (ARC) and AptarGroup, Inc. (ATR). All of these have a Zacks Rank #2 (Buy).
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