The Eagers Automotive Ltd (ASX: APE) share price has jumped out of the gates on Thursday morning.
In early trade, the auto retailer's shares are up 11% to $9.81.
This makes the Eagers Automotive share price the best performer on the ASX 200 index.
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Why is the Eagers Automotive share price zooming higher?
Investors have been bidding the Eagers Automotive share price higher today after the company announced a major share buyback plan.
According to the release, the company intends to undertake an on-market share buyback of up 10% or ~25.7 million of its shares. Based on its current share price, this implies a buyback of approximately $250 million.
Management highlights that this share buyback reflects the board's prudent focus on active capital management and is a testament to the company's strong balance sheet.
Eagers Automotive plans to commence the on-market share buyback on 30 June for a period of 12 months. Though, it remains subject to market conditions and the company's securities trading policy.
The release also notes that this decision to launch the buyback was driven by its strong performance in FY 2022 and the "extreme stock market volatility in recent weeks."
The latter saw the Eagers Automotive share price hit a 52-week low on Wednesday and extend its year to date decline to 37%.
This was despite the company recently revealing that business continues to boom. So much so, it expects to record an underlying operating profit before tax from continuing operations in the range of $183 million to $189 million for the first half of FY 2022.
Management also spoke cautiously optimistic about the second half of the financial year. It commented:
While the outlook for vehicle supply, and therefore timing of vehicle deliveries to customers, remains unclear, Eagers Automotive is well positioned to deliver a strong second half performance subject to supply constraints easing.
