Ansell (ASX:ANN) share price jumps on share buyback news

The Ansell (ASX:ANN) share price is on the rise this morning after the company announced it may recommence its share buyback program.

| More on:
ASX dividend shares represented by cash in jeans back pocket

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Ansell Limited (ASX: ANN) shares are on the rise this morning after the company provided an update regarding its share buyback program. At the time of writing, the Ansell share price has edged 1.68% higher to $37.47.

Let's take a look at what the company announced.

What did Ansell announce?

In a statement to the ASX this morning, the personal protection and glove manufacturer announced it may recommence its share buyback program from 5 March 2021. This date is the day after the company's dividend reinvestment program pricing period concludes.

Ansell had previously announced, at its November 2020 AGM, that it would pause the share buyback program for 12 months. The buyback, which was announced in October 2019, was initiated due to "an absence of sufficient opportunities and [an] excess of cash on the balance sheet."

That announcement was prior to the COVID-19 pandemic. Since then, the company has seen unprecedented demand for its rubber gloves and personal protection equipment.

In its half-yearly update for FY21, Ansell recorded a 24.5% increase in sales on the prior corresponding period (pcp). As well, earnings per share (eps) and profit attributable both rose – by 65.5% and 61.9% respectively on the pcp. The company partially attributed these increases to the pandemic.

What is a share buyback?

According to the Commonwealth Bank of Australia (ASX: CBA):

A buyback is when a company offers to re-purchase some of its shares from existing shareholders.

The net effect is a reduction in the total number of a company's shares on issue. This is generally seen as a way for companies to boost shareholder returns because after the buyback a company's profit will be spread across fewer shares.

CommBank suggests some of the reasons for a share buyback include:

  • Using surplus cash the company doesn't plan to use for acquisitions.
  • Making a change to the company's capital structure. This is because changing the amount of shares on issue will have an impact on things like the company's ratio of debt to equity.
  • Giving a boost to shares if the company feels they are undervalued.

The buyback will result in either a capital gain or loss, depending on the price you purchased the share at. This will have tax implications for the investor.

Ansell share price snapshot

The Ansell share price has soared nearly 115% over the past five years. Over the course of the last 12 months, Ansell shares have gained around 27%. Shares in the company reached a 52-week high of $42.91 in November 2020 and a low of $21.43 in March 2020.

Based on the current Ansell share price, the company has a market capitalisation of around $4.8 billion.

Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ansell Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

Man with backpack spreading his arms out and soaking in the sun.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a disappointing session for investors today.

Read more »

A businessman hugs his computer and smiles.
Opinions

3 ASX 200 shares to buy and hold forever

I don't expect these stocks to go out of style anytime soon.

Read more »

American soldier in military uniform using laptop for drone controlling.
Share Market News

ASX defence shares lift amid NATO Summit decision to turbocharge spending to 5% GDP

The North Atlantic Treaty Organization (NATO) has also signed a 'milestone' agreement with Australia.

Read more »

A group of businesspeople clapping.
Broker Notes

Bell Potter names the best ASX 200 shares to buy in FY26

The broker has good things to say about these shares.

Read more »

Man on his laptop standing next to data centres.
Broker Notes

Macquarie tips 54% upside for NextDC shares

NextDC shares certainly have momentum.

Read more »

Frustrated and shocked business woman reading bad news online from phone.
Share Fallers

Why Bannerman Energy, Life360, Strike Energy, and Xero shares are tumbling today

These shares are under pressure on Thursday. But why?

Read more »

Cheerful boyfriend showing mobile phone to girlfriend in dining room. They are spending leisure time together at home and planning their financial future.
Share Fallers

Why DroneShield, Neuren, Paradigm, and Pilbara Minerals shares are roaring higher today

These shares are having a strong session on Thursday. But why?

Read more »

Two lab workers fist pump each other.
Broker Notes

What's JP Morgan's price target on CSL shares?

Are CSL shares undervalued or will they continue to underperform?

Read more »