Sunday, March 29, 2015

Merck: Buyback Plan Not As Impressive As It Appears


Summary

  • Merck announces another large stock buyback.
  • Though Merck has a solid net payout yield, the yield doesn't match the highest in the market.
  • The smaller buybacks plan than two years ago along with the higher stock price is a big negative for the stock going forward.
Merck (NYSE:MRK) made headlines this week with the announcement of adding $10 billion to the stock buyback program. The large pharma has a long history of returning cash to shareholders, but the company made a perplexing statement regarding shares outstanding that convolutes the benefits of the buyback. On top of that, the stock has a market value of $163 billion making one wonder if the announced capital return is enough to make the stock interesting after a few years of strong stock gains.

Read the full article on Seeking Alpha.


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