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In a concerted effort to return cash to shareholders, Lender Processing Services, Inc. (LPS - Analyst Report) recently authorized a new $100 million share repurchase program to purchase common stock over a period of time through the open market or negotiated transactions. The company intends to complete the share repurchase program by Jun 30, 2014. The current share repurchase program replaces the company’s erstwhile share repurchase authorization that expired at year-end 2012.
Lender Processing expects to fund the share repurchases through available cash. At year-end 2012, cash and cash equivalents of the company aggregated $236.2 million. The company also expects to generate significant cash flow to further repurchase shares and maintain a steady dividend payout. Net cash provided by operating activities in the last reported quarter stood at $434.5 million.
In addition, the company also authorized a regular quarterly dividend of 10 cents per share, which is payable on Mar 21, 2013, to shareholders of record as of Mar 7. Lender Processing has historically maintained a steady dividend payout and based on the closing price of $25.40 as of Feb 8, 2013, the current dividend affirms a yield of 1.60%.
Moving forward, Lender Processing is well positioned to enhance the mortgage value chain and deliver innovative technology, data and expertise to its clients. The rapidly growing mortgage landscape continues to create new requirements for its clients. Also, the recent conclusions of many of the company’s legal matters allow it to focus more on growth and innovation to create new opportunities for the company.
However, the company needs to be wary of intense competition from industry bigwigs, which include formidable names such as Heartland Payment Systems Inc. (HPY - Snapshot Report), Global Payments Inc. (GPN - Snapshot Report), and Fidelity National Information services, Inc. (FIS - Analyst Report), each carrying a Zacks Rank #2 (Buy). However, Lender Processing currently has a Zacks Rank #4 (Sell).
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