What: Leading glove and condom manufacturer Ansell Limited (ASX: ANN) has announced a 'Capital Management Initiative' which will see the group launch an on-market buy-back of up to US$100 million worth of shares over the next 12 months. Other companies also currently conducting buybacks include Seven Group Holdings Ltd (ASX: SVW) and Aurizon Holdings Ltd (ASX: AZJ).
So What: A share buy-back can be a value accretive action for shareholders provided it is conducted when the share purchase price represents good value for continuing shareholders. So, while it was pleasing to see Ansell announcing this initiative, it was even more pleasing to see the company note that it "intends to conduct the buy back on an opportunistic basis having regard to prevailing share price and market conditions."
Now What: Ansell's announcement comes around two weeks after the group reported a solid set of full year results which showed (on an underlying basis) a 3.5% rise in sales, an 18.8% rise in earnings before interest and tax, an 11.4% rise in earnings per share to US$1.10 and a 10.3% rise in the full year dividend to US43 cents.
With the stock trading on a price-to-earnings ratio of around 14 times, now certainly appears a reasonable opportunity for Ansell to launch a buy-back as it would be hard to consider the stock as expensive. What's more, it could also be an appealing time for investors to take a closer look at the company with the buy-back an added positive factor in an evaluation.
