Rockwell (COL) Approves Stock Repurchase Plan Worth $200M

Zacks Equity Research
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Rockwell Collins COL announced that its Board of Directors approved the repurchase of additional $200 million of the company’s common stock. This additional share repurchase authorization will help the company to meet its share repurchase plans for the balance of fiscal year 2017 into 2018.

The additional authorization will bring the company’s total share repurchases amount to approximately $285 million. This repurchase announcement is an addition to Rockwell Collins’ previous repurchase agreement announcement in Oct 2016.

Rockwell Collins expects to maintain the share repurchase program to offset dilution and repay a significant acquisition-related debt. The $200 million buyback authorization demonstrates the ability of the company to generate cash flow needed to achieve capital deployment priorities.

Shareholder Friendly Moves

In addition to share buyback, management of Rockwell Collins also pays regular dividend to its shareholders. The annual dividend rate is $1.32, reflecting a dividend yield of 1.24%.

The strong cash flow generation capacity of the company allows it to continue with  the shareholder friendly initiatives.

What’s Driving the Company

The acquisition of B/E Aerospace is expected to increase free cash flow of Rockwell Collins by $50 million and move the free cash flow range to $650–$750 million in fiscal 2017. Plus the combined company is anticipated to generate free cash flow over the next five years.

Further, it has been gaining from the increase in demand from the commercial aerospace. The current massive backlog of commercial aircraft of The Boeing Company BA and Airbus SE EADSY is going drive performance of this communications and aviation systems provider.

Price Performance

In the last 12 months, Rockwell Collins has outperformed the Zacks categorized Aerospace - Defense Equipment industry. The company’s shares rallied 27.3% compared with the industry’s gain of 23.3%.

The company is the foremost global supplier of communications and avionics equipment for both commercial and military customers that results in higher volume sales. Meanwhile, numerous contracts generate revenues for the company, the outperformance can be attributed to such a diversified portfolio that it owns and also protects it from risks arising out of reduced orders.

Better Ranked Stock

Rockwell Collins currently carries a Zacks Rank #3 (Hold).

Investors can also consider KLX Inc. KLXI which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

KLX delivered an average surprise of 18.67% in the trailing four quarters. Its 2017 estimates have risen by 90.7% to $3.09 per share in the last 90 days.

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Boeing Company (The) (BA) : Free Stock Analysis Report
 
Airbus Group (EADSY) : Free Stock Analysis Report
 
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