In an effort to boost its shareholder value, the board of directors of Heartland Payment Systems , approved a new share buyback program. As per the authorization, the company will be able to repurchase up to $75 million worth of shares through open market or privately negotiated transactions.
This new program has been authorized due to the expiration of the previous $50 million buyback program and is effective immediately. Under its previous authorization, Heartland purchased approximately 1.7 million shares at an average share price of $29.98.
Heartland's financial strength allows it to continue with its buyback program. As of Mar 31, 2013, cash and cash equivalents of the company stood at $37.5 million. The company also expects to generate and utilize strong cash flow to enhance shareholder worth through repurchases. Heartland used $14.3 million of operating cash during the first quarter of 2013 to buyback approximately 0.5 million shares, taking the tally to $150 million worth of shares repurchased in the last 18 months.
Heartland expects to deliver operating earnings per share in a range of $1.92–$1.96 for full year 2013. We believe that the share repurchases will help it achieve the guided range. The Zacks Consensus Estimates for 2013 is currently pegged at $1.99, higher than the company’s guidance and also representing a 20.5% improvement year-over-year.
Additionally, the company declared a quarterly dividend of 7 cents per share payable on Jun 15, 2013 to shareholders of record as of May 24, 2013. Heartland has maintained a steady dividend payout, including a $2.6 million paid in the first quarter of 2013.
The company continues to focus on improving revenue, expanding margins and fortifying its capital structure, which helped it deliver solid results in the first three months of 2013.
However, no earnings momentum has been witnessed over the last 7 days. We expect the news of the new buyback authorization will encourage analysts to pull up their estimates.
Among others who sought to increase shareholders’ confidence, Lender Processing Services, Inc. authorized a $100 million share repurchase program to purchase common stock over a period of time through the open market or negotiated transactions in Feb 2013. The company intends to complete the share repurchase program by Jun 30, 2014.
Heartland currently carries a Zacks Rank #3 (Hold). Among others in the industry, Official Payment Holdings Inc. carries a favorable Zacks Rank #1 (Strong Buy) and Visa Inc. (V - Free Report) carries a Zacks Rank #2 (Buy).