The Spanish stainless steel manufacturer Acerinox has gained appeal in the eyes of the market after approving a share buy-back program of 150 million euros and the distribution of a dividend of 0.5 euros per share, which means maintaining the amount of dividend paid on previous exercise.
Specifically, the plan announced by Acerinox includes the acquisition of up to 10,821,848 shares, representing 4 percent of the capital and with a maximum investment amount of 150 million euros.
Shares must be purchased at market price, with a maximum average price of 13.86 eurthe by action.
Santander Bank will act as agent and will receive an irrevocable mandate to purchase shares and will adopt its purchase decision without any influence or interference from Acerinox.
The maximum period of validity of the company’s plan is from December 20, 2021 to May 6, 2022, both inclusive.
The market welcomes the share buyback plan
After knowing the shareholder remuneration policy that the management will propose to the company at the General Shareholders’ Meeting, Acerinox shares gained 0.23 percent, which is not small if we take into account that the IBEX-35 traded this Monday down due to the increase in concerns related to the omicron variant of Covid-19.
“Positive news; the market was waiting for his announcement, “said César Sánchez-Grande, the Renta 4 analyst who follows the stock, in a comment released after the news was known.
“With this 4 percent, plus the 2 percent already made in the years 2018-2019, the company would already amortize 6 percent of the 10 percent of shares issued while making the payment of the dividend via scrip, shares that Acerinox announced in the moment that his intention was to amortize them ”, says the expert.
New announcements of share buyback are expected in Acerinox
In fact, the market expects Acerinox to buy back the remaining 4 percent of the shares it issued to pay the dividend in shares.
“Given the good outlook for the next few years, we estimate that the company will announce future share buyback plans to complete this 10 percent,” adds Sánchez-Grande, who has the value on recommendation of being overweight at a price target of 19 , 3 euros per share.
Likewise, the company itself has recognized that this is its objective with the measure. Acerinox’s goal is “improve earnings per share, reducing the number of shares issued in the four years (2013-2016) in which the dividend was paid through a flexible dividend or ‘scrip dividend’, “says the company’s statement.
But Sánchez-Grande is not the only market expert who welcomes the action of the Spanish stainless steel company.
Favorable opinion of the consensus regarding the Acerinox share
In general, the consensus is very positive with the Spanish listed company, which has risen 20.66 percent in the stock market so far this year.
Thus, 95.2 percent of the experts that Acerinox follows recommend buying the company’s shares (20 analysts); compared to a much smaller 4.8 percent of specialists that he advises to keep (1 analyst) and none of them believe that it is preferable to sell.
As for the Bloomberg consensus price target, it’s also quite generous.
Specifically, it stands at 16.38 euros, compared to the levels of 10.91 euros at which Acerinox is currently trading, which gives it a potential of 50.1 percent.
These are levels much higher than the maximum of the year that Acerinox touched in October, at 12.24 euros.