Tobacco giant Imperial Brands (GB:IMB) yesterday announced the start of an ongoing multi-year £1 billion share buyback programme, thanks to improved performance and balance sheet strength in the fiscal year 2022.
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Yesterday, IB’s stock reached a three-year high and finished the day with a 2.4% increase. Overall, the company’s stock has grown by almost 40% in the last year, driven by improved sales and market share growth.
The buyback is a part of the company’s five-year strategy, launched in January 2021, to strengthen shareholder returns.
In the next phase, IB will repurchase £1 billion of shares in the next year, ending in September 2023. The total capital return for the fiscal year 2023 is expected to exceed £2.3 billion, including ordinary dividends.
The company expects its net revenue and adjusted operating profits for the full year to increase by 1%. This was mainly supported by a higher price mix and improved market shares in its top five markets, which contribute to almost 70% of operating profits.
Matt Britzman, an equity analyst at Hargreaves Lansdown, said, “News of a fresh £1bn buyback at Imperial Brands will be welcomed by investors and is the culmination of work done over the last two years to get a tight grip on capital allocation and increase focus into core business areas.”
What are the products of Imperial Brands?
Imperial Brands is a multinational tobacco manufacturer with a leading range of tobacco products and smoking accessories.
Its brands include West, Davidoff, Gauloises, Winston, Lambert& Butler, Pulze and iD, and more.
Is Imperial Brands a good Stock to buy?
According to TipRanks, Imperial Brands stock has a Strong Buy rating, based on five Buy recommendations.
The IMB target price is 2,405p, which represents a 23.8% change in the price from the current level.
Ending thoughts
The company’s second-half performance has improved significantly.
This clubbed with a healthy balance sheet, has enabled the company to start a buyback program, and it remains on track to hit the target of its five-year plan.
