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Genesco Rewards Shareholders with $100M Buyback Plan

Zacks Equity Research
Updated

Shares of Genesco Inc. GCO gained 1.4% to reach $58.51 yesterday, after the company authorized a new $100 million share repurchase program. This repurchase initiative replaces the company’s existing $75 million share buyback program, authorized in September 2013.

Genesco will repurchase the shares via a mixture of methods including open market purchases, private transactions, block trades or a blend of such methods. However, the timing and amount of the repurchases will depend on various factors like market conditions and share price.

We believe this latest share buyback program would significantly boost shareholders’ return, reflecting the company’s strong liquidity position. Further, through these shareholder friendly moves, the company is trying to bolster investor confidence on the stock, thereby persuading them to either buy or hold the scrip instead of selling them.

We also perceive that shareholders are positioned to gain given the company’s stellar second-quarter performance. Earlier this month, the company posted second-quarter fiscal 2016 adjusted earnings per share of 36 cents. Quarterly earnings fared significantly better than the Zacks Consensus Estimate of 25 cents as well as the prior-year quarter figure of 34 cents on the back of robust sales growth. Further, net sales came in at $655.5 million, up 6.5% year over year and also ahead of the Zacks Consensus Estimate of $650.6 million.

In fiscal 2016, the company expects adjusted earnings per share in the range of $4.70 to $4.80 and comparable-store sales to rise in the range of 4–5%.

Share repurchase programs have always been good news for investors. We expect the company to take up more such endeavors in the future.

Genesco currently carries a Zacks Rank #3 (Hold).

Stocks that Warrant a Look

Some better-ranked stocks in the same industry include Express Inc. EXPR, Destination XL Group, Inc. DXLG and Foot Locker, Inc. FL. All three stocks carry a Zacks Rank #1 (Strong Buy).

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
FOOT LOCKER INC (FL): Free Stock Analysis Report
 
EXPRESS INC (EXPR): Free Stock Analysis Report
 
GENESCO INC (GCO): Free Stock Analysis Report
 
DESTINATION XL (DXLG): Free Stock Analysis Report
 
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Zacks Investment Research