D’Ieteren Group continues to buy back its own shares as part of a repurchase program launched in 2019, with the company now holding approximately 2.5% of its total ordinary shares outstanding as self-owned treasury stock. Michael Collins of EquiNova Capital Partners says the “fairly common” practice of a company purchasing its own shares can be viewed positively or negatively by market watchers, depending on their point of view.
D’Ieteren Group, which includes Belron, the majority owner of Safelite AutoGlass, launched the repurchase program in 2019 and reinstated it in March 2022 following a temporary suspension stemming from COVID-19. That suspension resulted from the company wanting to safeguard its liquidity. The group says the goal of the program is to invest excess cash in its own shares by eventually canceling the reacquired treasury stock.
“In launching the buyback program, the company indicated that it was bullish on the future performance of its shares due to the ‘positive expected evolution of the group’s activities,’” Collins says.
From August 2019 to March 2022, the group purchased 934,692 treasury shares for a total of approximately $46 million. To date, D’Ieteren has purchased a total of 1,461,382 treasury shares for a total of $134 million. The group has purchased shares on an almost weekly basis since March of last year. As of March 14, 2023, the group held 1,388,254 of its own shares out of 54,367,928 ordinary shares, or approximately 2.5%.
“On one hand, a move like this is seen as being bullish on the company’s future performance, since the public company has the right to re-sell such treasury stock in the future at higher prices if the market price rises over time,” Collins says. “Other market watchers view share repurchases negatively since a company that buys back its own stock is perceived not to have more attractive opportunities to deploy its cash through acquisitions, developing new products and other measures.”
Collins also says large share buybacks can be used to increase earnings per share (EPS) by decreasing the number of shares outstanding without any change in earnings.
“Essentially, the company is buying its own shares on the open market, just like any other investor,” Collins says.