Helen of Troy sets $500 million share buyback

EL PASO, Texas - Consumer products company Helen of Troy Limited (NASDAQ:HELE) has announced a new share repurchase program, authorizing the buyback of $500 million in common shares. This initiative, which represents about 43% of the company's outstanding common stock based on the closing price as of August 20, 2024, is part of its capital allocation strategy aimed at delivering value to its shareholders.

The repurchase program, effective from August 20, 2024, is set to last for three years, substituting the previous authorization that had approximately $245.3 million remaining. Helen of Troy may execute the buyback through various methods, including open market purchases and privately negotiated transactions, without the obligation to acquire any minimum number of shares. The company has discretion over the timing and volume of repurchases, which will be influenced by market conditions and other capital utilization opportunities.

As of August 20, 2024, the company had roughly 22.8 million shares outstanding. CEO Noel M. Geoffroy expressed confidence in the company's strategic direction and brand strength, emphasizing the commitment to growth investments and capital management for sustainable long-term shareholder returns. Geoffroy also highlighted the company's intent to reduce its net leverage ratio by the end of the fiscal year.

Helen of Troy Limited is known for its diverse portfolio of consumer brands, including OXO, Hydro Flask, and Vicks, among others. The share repurchase announcement is based on a press release statement and is a common practice among companies aiming to manage their capital effectively and potentially increase their stock value. However, it's important to note that share repurchase programs can be modified, suspended, or discontinued at any time.

In other recent news, Helen of Troy Limited faced significant fiscal challenges as the company's first-quarter earnings and revenue results for fiscal year 2025 fell short of expectations. This led to a nearly 20% reduction in its earnings per share forecast. As a result, DA Davidson downgraded Helen of Troy's stock from Buy to Neutral, and reduced the shares target to $67 from the previous $139. Simultaneously, UBS and Canaccord Genuity adjusted their outlooks for Helen of Troy, with UBS revising its price target down to $72 from $100, and Canaccord Genuity reducing its target to $84 from $137.

Despite these challenges, Helen of Troy remains committed to strategic brand-building, marketing, and infrastructure improvements. The company's management has signaled that this fiscal year will be a "reset year," with a shift in focus towards brand building and business restructuring. These recent developments reflect the company's efforts to navigate a challenging fiscal landscape and improve its future performance.

InvestingPro Insights

In light of Helen of Troy Limited's (NASDAQ:HELE) recent announcement of a substantial share repurchase program, several metrics and InvestingPro Tips provide further context to the company's financial health and market position. With a market capitalization of $1.21 billion and a P/E ratio of 8.31, the company presents a valuation that some investors might find attractive, especially considering the P/E ratio is relatively low compared to near-term earnings growth. This is underscored by the adjusted P/E ratio for the last twelve months as of Q1 2025, which stands at 8.75.

InvestingPro Tips suggest that the management's aggressive share buyback strategy could be a sign of their confidence in the company's value. This is further supported by the high shareholder yield, which is often a signal of a company's commitment to returning value to its shareholders. Additionally, the company's liquid assets surpassing short-term obligations is a positive indicator of financial stability.

Nevertheless, it's worth noting that 6 analysts have revised their earnings estimates downwards for the upcoming period, which may warrant caution. Moreover, while the company does not pay a dividend, the share repurchase program could be seen as an alternative method of rewarding investors.

The real-time data also reflects a challenging period for Helen of Troy's stock price, which has seen a significant decline over the past year, including a 48.66% drop over the last three months. This could potentially present a buying opportunity for value investors, especially when considering the company's InvestingPro Fair Value estimate of $93.37, substantially higher than the previous close price of $53.75.

For readers interested in a more in-depth analysis, there are additional InvestingPro Tips available for Helen of Troy Limited, which can be found at InvestingPro.

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