Latest news with #sharebuybacks
Yahoo
a day ago
- Business
- Yahoo
Should PayPal be on my list of shares to buy?
On the face of it, PayPal (NASDAQ:PYPL) ought to be on my list of shares to buy. The company has a market value of $69bn and has generated just under $6bn in free cash in the last year. With minimal debt, that implies a free cash flow yield of almost 9%. That's pretty high considering the business isn't in decline – but there's a catch when it comes to the valuation. With no dividend, PayPal returns cash to shareholders via share buybacks. These work by reducing the outstanding share count, increasing the value of each of the remaining shares. Since 2020, PayPal's returned over $20bn via share repurchases. That's around 30% of its current market value and the returns have been going up. Year Share Buybacks 2024 $6bn 2023 $5bn 2022 $4.2bn 2021 $3.4bn 2020 $1.6bn Despite this, the company's share count has only fallen by about 13% over the last five years. That's much less impressive and it raises an important question for investors. PayPal's share count isn't really going down much despite the firm using almost all the free cash it generates to buy back shares. So where's the money going? A big part of the answer is stock-based compensation. This is where PayPal issues shares to pay its staff part of their salaries in the firm's stock, rather than cash. A lot of companies do this and I don't think there's anything intrinsically wrong with it. But it's something that investors need to factor into their calculations. Since 2020, PayPal's issued around $6.5bn in stock to cover these expenses. And this has gone some way towards offsetting the cash the firm's been using for share buybacks. In 2024, the company spent almost $6bn on repurchasing shares, but just over 20% of this was offset by stock-based compensation. So the outstanding share count only fell by around 6%. Stock-based compensation doesn't involve cash leaving the business directly. As a result, some investors tend to think it isn't a real expense. I however, think this is a mistake. Issuing equity automatically reduces the value of share buybacks and this is a key mechanism companies can return cash to shareholders. This is especially true when it comes to PayPal. Its 9% free cash flow yield's attractive at first sight, but the firm can't just use this to bring down its share count by that amount every year. Before it can start bringing down its number of shares outstanding, it has to buy back the ones it issued. And it has to do that with cash, making it a very real expense for investors. I don't think PayPal's stock-based compensation is a reason to dismiss the stock out of hand immediately. And the company's undergoing an interesting shift in terms of its priorities. Focusing on margins over revenue growth could boost profits and integrating further into the online transaction process could boost its competitive position. These are potential positives. For the time being though, I think there are better opportunities available. While the stock looks like a bargain at first sight, I don't think it's as attractive for me as it seems. The post Should PayPal be on my list of shares to buy? appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool Stephen Wright has no position in any of the shares mentioned. The Motley Fool UK has recommended PayPal. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025 Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
5 days ago
- Business
- Yahoo
Ashtead Group PLC (ASHTF) Q4 2025 Earnings Call Highlights: Record EBITDA and Strategic Growth ...
Group Rental Revenue: Increased by 4%. Group EBITDA: Grew by 3% to $5 billion. Pre-Tax Profit: $2.1 billion. Earnings Per Share: $3.70. EBITDA Margin: 47%. Capital Expenditure: $2.4 billion. Free Cash Flow: Near record of $1.8 billion. Dividends Paid: $544 million. Share Buybacks: $342 million. New Customers Added: 42,000. New Locations Added: 61 in North America. North America General Tools Rental Revenue: Grew by 1% to $5.9 billion. North America Specialty Rental Revenue: Increased by 8% to $3.3 billion. UK Rental Revenue: Increased by 5% to $778 million. Operating Profit Margin: 25%. Interest Expense: $559 million. Adjusted Earnings Per Share: $3.70. Guidance for Fiscal Year 2026: Group rental revenue growth between flat and 4%. Planned Capital Expenditure for Fiscal Year 2026: $1.8 billion to $2.2 billion. Expected Free Cash Flow for Fiscal Year 2026: $2.0 billion to $2.3 billion. Warning! GuruFocus has detected 3 Warning Signs with XAIR. Release Date: June 17, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Ashtead Group PLC (ASHTF) reported record rental revenues and EBITDA for the year, with group EBITDA reaching $5 billion and a margin of 47%. The company successfully added 42,000 new customers, contributing to $1.9 billion in rental revenue growth. Ashtead Group PLC (ASHTF) achieved near-record free cash flow of $1.8 billion, despite significant capital investments. The company launched a $1.5 billion share buyback program, demonstrating confidence in its cash-generative growth model. The Specialty business segment showed strong performance, with an 8% increase in rental revenue, and is expected to drive higher returns in the future. Total revenue was down 1% due to a planned lower level of used equipment sales, impacting overall profitability. The UK segment showed lower returns with an operating profit margin of only 8% and ROI of 7%, indicating room for improvement. The North American general tools segment experienced a decline in operating profit, attributed to lower gains on equipment sales and higher depreciation charges. The company anticipates flat to 4% rental revenue growth for the next fiscal year, reflecting ongoing market challenges. There is a noted slowdown in the Specialty segment's growth rate, with some areas like film and TV and oil and gas experiencing significant declines. Q: Can you provide an update on May trading and the current rental revenue guidance? A: Brendan Horgan, Chief Executive, noted that May saw a 2% increase in North America on a billing per day basis. The rental revenue guidance is expected to be between flat and 4%, with specialty business likely in the mid-single-digit range and general tool in the lower single-digit range. The UK is expected to be relatively flat. The growth is anticipated to be more back-half weighted due to factors like hurricane revenue in the first half of the previous year. Q: What are the opportunities for margin improvement and cost controls? A: Alexander Pease, Chief Financial Officer, explained that the company has taken actions to align its cost structure, particularly after significant investments during Sunbelt 3.0. The focus is now on leveraging these investments through logistics optimization and maintenance activities. Brendan Horgan added that the company is confident about margin progression over the course of Sunbelt 4.0, with a strong start in the first year. Q: How do you view the long-term split between general tool and specialty businesses, and will your M&A strategy reflect a greater emphasis on specialty? A: Brendan Horgan stated that the specialty business is expected to continue growing, potentially reaching closer to 50% of the total business over time. The M&A strategy will likely focus on specialty, given its robust landscape and potential for growth. However, the actual split will depend on market conditions and opportunities. Q: Could you elaborate on the market share gains and the impact of competitor disruptions? A: Brendan Horgan highlighted that Ashtead Group has been successful in adding new customers, with 42,000 new accounts generating over $400 million in revenue in the current fiscal year. The company is gaining market share across various customer segments, including large strategic accounts. Horgan did not comment on competitor disruptions but emphasized the positive impact of industry consolidation. Q: What is the impact of potential changes in bonus depreciation rules on free cash flow? A: Alexander Pease explained that reinstating 100% bonus depreciation could reduce cash tax by around 10 percentage points, translating to approximately $200 million in cash impact. This would be upside to the current guidance, which is based on the existing tax regime. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus.
Telegraph
6 days ago
- Business
- Telegraph
This stock has served us well, but it's time to bank profits and move on
Last week's third-quarter update from Bellway reads well, and the Government seems determined to do what it can to galvanise the housing market. However, the housebuilder's shares now trade at slightly above historic net asset value (Nav) per share, which makes it feel as if the easy money is already in the bag, meaning it is time to bank profits and move on from the FTSE 250 firm. Bellway's completions and average selling prices for the year to July both look set to slightly exceed expectations, while an increase in reservation rates and the forward order book provides management with greater visibility for the next financial year, to July 2026. Chief executive, Jason Honeyman, and his team now expect a cumulative 20pc increase in completions across 2025 and 2026. Management is also hinting at share buybacks when the company completes a review of its capital allocation policies later this year. As a result, analysts are gently nudging up profit expectations for this year and next. Investors who feel that an upturn in demand is coming – and that planning deregulation will ease cost burdens – may feel this represents an opportunity. Others will fret about affordability, weak consumer confidence and how sticky inflation could crimp the rate at which interest rates, and thus mortgage rates, decline. What is clear for the moment, at least, is that analysts' forecasts for Bellway's housing completions still leave the forecast total for the year to July 2026 below the equivalent figure for the twelve months to July 2017. Higher house prices have therefore done much of the heavy lifting so far as sales and profits are concerned, and it hard to see why profits and margins will rapidly return to the levels seen during the go-go times of the late 2010s, when the Bank of England base rate was almost zero and Help-to-Buy was in full swing. We do not have a crystal ball and thus do not know what is coming next. Nor are we keen to rely blindly upon government policy given the scope for delay, error, or, at some stage, a change of administration and thus change of said policy. Our ultimate guide must therefore be valuation. Covid, higher interest rates, rising input costs, the end of Help to Buy in 2023 and regulatory levies have all weighed on Bellway and the housebuilders more generally, with the result that stocks have derated. Whereas multiples of toward two times historic Nav prevailed, the sector now trades on barely one times. We first looked at the Bellway in the immediate wake of the stock, bond and currency market gyrations that followed the Truss-Kwarteng mini-Budget of autumn 2022, when the housebuilder traded at a deep discount to Nav. Our capital gain is now nearly 40pc, while dividends received represent 310p a share, or a sixth of our entry price. As such, it feels prudent to crystallise our paper gains, especially as we still have exposure to the industry through Crest Nicholson, MJ Gleeson and Springfield Properties. These all still trade at a discount to historic Nav of at least 25pc, even if some would argue there are good reasons for them to do so, given their recent spotty operational and financial performance. Questor says: sell Ticker: BWY Share price: £28.76 Update: Assura Well, that did not take long. A fresh bid for Assura from KKR means we can continue to watch the takeover tussle for the healthcare real estate investment trust (Reit) develop, in the knowledge that some sort of deal looks assured. Investors can start to do their research on what may be suitable, replacement portfolio picks, either within the Reit sector, where lowly valuations relative to Nav still prevail or elsewhere. Private equity and investment giant KKR has upped its offer to 52.1p per share in cash and dividends for Assura, a slight premium to Assura's latest stated Nav of 50.4p. Rival suitor, Primary Health Properties, a UK-listed healthcare specialist Reit, has tabled a cash-and-stock offer, which also includes dividends, and is now worth 53p a share thanks to a plan to pull forward an additional dividend due for payment in the autumn. Assura has flip-flopped from recommending February's initial KKR offer, to doing due diligence on the PHP approach, and then returning to recommending KKR, a move which PHP has understandably contested.
Yahoo
6 days ago
- Business
- Yahoo
Lockheed's Consistent Payouts Cement Its Role as a Dividend Leader
Lockheed Martin Corporation (NYSE:LMT) is among the . The company's business segments produce substantial cash flow. After allocating funds toward research and capital investments, the company returns value to shareholders primarily through dividends and share buybacks. Two fighter jets in flight, highlighting the technology and experience of the companies combat aircraft. Buybacks reduce the total number of shares available, which increases each remaining shareholder's stake in the company. Over the past decade, Lockheed Martin Corporation (NYSE:LMT) has cut its outstanding shares by 21%. This reduction supports dividend growth without requiring a proportionally larger total payout, since fewer shares need to be paid. Combined with rising free cash flow, this strategy has enabled the company to steadily increase its dividend per share, up 156% over the last 10 years. Lockheed Martin Corporation (NYSE:LMT)'s dividend profile remains strong, with 22 consecutive years of dividend growth under its belt. The stock supports a dividend yield of 2.71%, as of June 14. Lockheed Martin Corporation (NYSE:LMT) delivers comprehensive space and mission solutions, ranging from human spaceflight to strategic defense systems, helping its customers maintain a technological edge. The company equips military forces with advanced tools across the full spectrum of deterrence and in every domain, enabling them to counter emerging threats effectively. While we acknowledge the potential of LMT as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: and Disclosure. None.
Reuters
06-06-2025
- Business
- Reuters
UBS buybacks may be hit by new capital rules: government
ZURICH, June 6 (Reuters) - UBS (UBSG.S), opens new tab may be able to carry out fewer share buy-backs in future following proposals that it should hold higher levels of core capital, the Swiss government said on Friday. The government proposed higher capital requirements for the lender's foreign units as part of wide-ranging new rules for UBS aimed at making Switzerland's financial centre more robust in the wake of the collapse of Credit Suisse in 2023. Dividend payments and organic growth should still be possible, subject to "appropriate transitions periods and provided profits have been generated," the government said. "The measure could mean that UBS will temporarily implement fewer share buybacks and reports a slightly lower return on equity along with lower risks," the government said in a statement. UBS Chairman Colm Kelleher in April reiterated the Swiss bank's intention to repurchase shares to the tune of $3 billion in 2025, despite the looming capital rule changes and global economic uncertainty. The growth of foreign subsidiaries or acquisition of foreign companies by UBS will still be possible, but will become more expensive because it has to be fully financed by the core capital, the government added. "The measure can therefore make foreign growth in subsidiaries more expensive," it added.
