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Synopsys Boosts Shareholders' Return With $100M ASR Program

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Continuing with its efforts to enhance shareholder value, Synopsys Inc. (SNPS - Free Report) last week announced that it is set to buy back $100 million worth of its common stocks under an accelerated share repurchase (ASR) program. The initiative reflects the California-based company’s sound financial position and favorable prospects.

Last Thursday, the company announced an agreement with HSBC in this connection. Per the agreement, Synopsys will initially receive approximately 1.01 million shares, while the remaining shares will be received on or before Nov 20, 2017, depending on the completion of purchase. The number of shares to be repurchased will be calculated on the basis of Synopsys’ volume weighted average share price during the stated period, after adjusting for a discount.

Per the company, accelerated share repurchase arrangements are an integral element of its overall framework for enhancing investors’ worth. Since fiscal 2015, the company has completed $605 million worth of ASR program.

Apart from the ASR agreements, the company also repurchased its common stock from the open market. In June 2017, Synopsys approved an extension of its existing share repurchase authorization to make it worth $500 million again. So far in fiscal 2017, the company has repurchased $300 million worth of its common stock.

Synopsys’ financial strength enables it to continue with its buyback program. As of Jul 31, 2017, the company’s cash, cash equivalents and short-term investments were $1.3 billion. Its aggressive share repurchase policies are anticipated to boost investors’ confidence. Synopsys’ strategy to return wealth to shareholders highlights its growth potential and stable liquidity position.

Notably, in the year-to-date period, the stock has outperformed the industry to which it belongs to. Synopsys has returned 35.6% during the said time period, while the industry gained 25.5%.

Other companies that have a consistent record of returning value through share repurchases and dividend payments are Apple Inc. (AAPL - Free Report) , Electronic Arts Inc. (EA - Free Report) and Accenture plc (ACN - Free Report) .

We believe that apart from enhancing shareholders’ return, these initiatives also raise the market value of the stock. Through share repurchases and dividend payouts, companies boost investors’ confidence, persuading them to either buy or hold the scrip. Looking ahead, Synopsys remains confident of its growth potential, thereby raising hopes for a further hike in shareholder value through dividend payouts and share buybacks.

Currently, Synopsys carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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