Perry Ellis Pumps Up Share Buyback - Analyst Blog
December 01 2011 - 9:00AM
Zacks
Perry Ellis International
Inc. (PERY) recently approved a $20 million extension of
its stock repurchase program, thereby maintaining the trend of
returning wealth to its shareholders from time to time, depending
on market conditions. This program now authorizes the company to
repurchase up to $40 million of its common stock over a
twelve-month period.
Perry Ellis will fund this
repurchase program through the cash balances and its available
credit facility. At the end of third-quarter 2011, Perry Ellis had
cash and cash equivalents of $21.4 million. Long-term debt was
$220.0 million.
Although the board allocated a
maximum of $40 million to carry out the program, Perry Ellis is not
obligated to buyback any specific number of outstanding shares, and
can revaluate the program on an ongoing basis.
Earlier in November 2007, the
company’s board of directors authorized repurchase up to $20
million of its common stock over a 12-month period. Then, in
September 2008, 2009 and 2010, the board extended the stock
repurchase program for the next twelve months.
Since inception, total repurchases
under this plan, remain $17.4 million through the third quarter of
fiscal 2012. Perry Ellis has about 22.6 million common shares
remaining under its current repurchase authorization.
Perry repurchased 418,000 and
1,769,296 shares of its common stock during fiscal 2010 and 2009,
respectively, at a cost of approximately of $1.8 million and $11.6
million. No purchases were made during 2011 as well as in the first
nine months of fiscal 2012.
We believe this is a positive step
toward the return of shareholder wealth. The increase in share
buyback authorization also affirms the company’s confidence in its
fundamentals. At the same time, buying back shares will help the
company in reducing the share count, thereby increasing earnings
per share and return on equity. As of November 30, 2011, the shares
of the company were trading at $14.30. The stock had historically
traded between $12.22 and $32.84 in the last 12 months. Apart from
bolstering shareholder value, this strategic move will also lift
the relatively undervalued share price.
Perry Ellis currently retains a
Zacks #4 Rank, which translates into a short-term Sell rating. We
are also maintaining our long-term Neutral recommendation on the
stock. Perry Ellis' peers include Polo Ralph Lauren
Corp. (RL) and CROCS Inc. (CROX).
CROCS INC (CROX): Free Stock Analysis Report
PERRY ELLIS INT (PERY): Free Stock Analysis Report
RALPH LAUREN CP (RL): Free Stock Analysis Report
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