🔥 Premium AI-powered Stock Picks from InvestingPro Now up to 50% OffCLAIM SALE

Imperial Brands Hits 32-Month High on Buyback News

Published 06-10-2022, 02:00 pm
© Reuters

By Geoffrey Smith

Investing.com -- Shares in Imperial Brands (LON:IMB) rose over 4% to their highest since the start of the pandemic, on Thursday, after the tobacco giant announced another £1 billion ($1.13 billion) buyback program.

The company said the move reflects strong trading and broader progress in an ongoing plan to raise profitability and shareholder returns.

The new buyback program will reduce Imperial's share count by around 5.5% over the next 12 months and will raise total returns over the period, including dividends, to around £2.3 billion, or 13% of the group's current market value.

Imperial flagged its intentions to increase shareholder returns some time ago, but the announcement of the buyback comes earlier than many had expected. RBC analysts called the timing of the move "a big deal," in providing a buyer of last resort at a time when most stocks and other risk assets are under pressure from the global economic slowdown. Citi analysts said the size of the buyback would represent over 6% of the average daily volume in the stock.

According to RBC's calculations, the move will lift earnings per share by between 4% and 5%, depending on how far Imperial's borrowing costs rise. Imperial has over £8 billion in long-term debt that it needs to service.

The more defensive nature of Imperial's business has led it to outperform most of the stock market this year, with only a handful of defense and energy companies in the FTSE 100 beating its 22% gain since January 1. The company said that it had ended its fiscal year in September in line with its previous guidance of a 1% rise in constant-currency revenue, thanks to a strong rebound in tourism over the summer that boosted duty-free sales.

It ended the year with net debt toward the lower end of its targeted range of 2-2.5 times earnings before interest, taxes, depreciation, and amortization. However, the company offered no guidance for the fiscal year that started this week.

By 04:10 ET (08:10 GMT), Imperial stock was up 4.4%, just off its intraday high.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.