HOTT Hot Topic, Inc. (MM)

As part of its shareholder friendly moves, Sally Beauty Holdings, Inc. (SBH) announced a new share buyback program. The board of directors of this cosmetic products retailer authorized the repurchase of shares worth $700 million, indicating their commitment toward utilizing cash flows to enhance stakeholders’ return.

This is the third share repurchase activity announced by Sally Beauty over a one-year period. Last year in May, the company bought back $200 million of shares, and again in August approved a share repurchase authorization of $300 million. Under this program, the company has so far repurchased shares worth $266.4 million, and the remaining $33.6 million now becomes part of the recently announced buyback program.  

The company stated that the repurchases would be made through cash in hand, cash generated from operating activities and through borrowings. Through its share buyback strategy, the companies bolster investors’ confidence on the stock, thereby persuading them to either buy or hold the scrip instead of selling them.

Shares of Sally Beauty hit a new 52-week high of $28.50 yesterday, before closing at $28.48, up 0.9% from the previous day’s session. The stock gained momentum, when the company delivered strong first-quarter fiscal 2013 bottom-line results of 32 cents a share that rose 10.3% from the year-ago quarter.

The share repurchase announcement also provided some cushion to the stock. Net sales during the quarter jumped 4.7% over the prior-year quarter to $905.4 million.

However, both the top and bottom lines results missed the Zacks Consensus Estimates of $915 million and 34 cents a share, respectively. Consequently, the analysts polled by Zacks lowered their estimates leading to a fall in the Zacks Consensus Estimates for fiscal 2013 and 2014 by 1.2% and 1.6% to $1.59 and $1.86, respectively, in the last 30 days. This is well reflected through our Zacks Rank #4 (Sell).

Other stocks worth considering in the non-food retail-wholesale sector are Ulta Salon, Cosmetics & Fragrance, Inc. (ULTA), Hot Topic Inc. (HOTT) and Marinemax Inc. (HZO), all of which carry a Zacks Rank #2 (Buy).

 
HOT TOPIC INC (HOTT): Free Stock Analysis Report
 
MARINEMAX INC (HZO): Free Stock Analysis Report
 
SALLY BEAUTY CO (SBH): Free Stock Analysis Report
 
ULTA SALON COSM (ULTA): Free Stock Analysis Report
 
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