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Verra Mobility (VRRM) Closes Secondary Offering, Share Buyback

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Verra Mobility Corporation (VRRM - Free Report) announced the completion of secondary offerings of common shares by an affiliate of Platinum Equity, LLC. The latter is Verra Mobility’s principal shareholder.

Concurrently, the company repurchased shares from the above-mentioned associate of Platinum Equity (referred below as the selling stockholder), per the buyback program announced on Aug 18, 2021.

Verra Mobility’s shares gained momentum on Aug 20, with shares increasing 3.30%. The trading session ended at $15.345.

Inside the Headlines

As noted, the secondary offering included 8 million of Class A common stock of Verra Mobility. The offering price was $14.75 per share. The selling stockholder also granted underwriters an option to repurchase 1.2 million shares in the coming 30 days. Notably, the proceeds from the secondary offering go to the selling stockholder.

Verra Mobility also bought back 6.8 million of its Class A common stock worth $100 million from the selling stockholder. The price at which the company repurchased shares is the same as the price applicable for the underwriters in the secondary offering mentioned above.

The company used its available cash for buying back shares. Exiting second-quarter 2021, its cash and cash equivalents were $147.3 million.

Prior to the above-mentioned announcements, Verra Mobility, on Aug 9, communicated that its board of directors approved a $100-million share buyback program. The authorization is valid for the coming 12 months.

We believe that the company’s buyback actions reflect its shareholder-friendly policies and strong cash position.

Zacks Rank, Price Performance and Earnings Estimates

With a market capitalization of $2.5 billion, Verra Mobility presently carries a Zacks Rank #3 (Hold). It specializes in providing mobility technology solutions. A rise in leisure travel, leading to high demand for rental cars, and red-light and speed-related programs from government agencies are benefiting the company. High costs, and operating and selling expenses might be concerning.

In the past three months, shares of Verra Mobility have gained 0.2% compared with the industry’s growth of 6.7%.


Zacks Investment Research
Image Source: Zacks Investment Research


The Zacks Consensus Estimate for the company’s earnings is pegged at 54 cents for 2021 and 91 cents for 2022, reflecting a decline of 22.9% and growth of 4.6% from the 30-day-ago figures. The consensus estimate for third-quarter earnings, pegged at 18 cents, mirrors a decline of 14.3% from the 30-day-ago figure.

VERRA MOBILITY CORP Price and Consensus


VERRA MOBILITY CORP Price and Consensus


Other Stocks With Active Buyback Program

Some other stocks in the industry, which are engaged in repurchasing shares, are Allegion plc (ALLE - Free Report) , Brady Corporation (BRC - Free Report) and Johnson Controls International plc (JCI - Free Report) . While Allegion currently has a Zacks Rank #2 (Buy), both Brady and Johnson Controls carry a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the first nine months of fiscal 2021 (ended April 2021), Brady repurchased shares worth $3.6 million, while Johnson Controls bought back shares worth $1,001 million in the first nine months of fiscal 2021 (ended June 2021). Allegion repurchased $199.8 million worth of shares in the first half of 2021.