The Washington Post Company (WPO) in its attempt to optimize its shareholders’ return, recently announced a new share repurchase program. Share buybacks enhances shareholders’ return and boosts the market value of the stock.
The newly announced program, which has no set time limit, authorizes the company to buy back up to 750,000 shares of its common stock through open market or private transactions.
The company also notified that the new program includes 43,573 shares remaining under the earlier buyback program.
In addition, the company also declared a regular quarterly dividend of $2.35 per share. The announced dividend will be paid on November 04, 2011to stockholders of record as of October 24, 2011.
Earlier, the company posted second-quarter 2011 results. The Washington Post’s second-quarter 2011 earnings of $5.92 per share beat the Zacks Consensus Estimate of $5.87, but dropped more than 50% from the prior-year quarter owing to weak advertising demand and sluggish student enrollment.
New student enrolment dropped 47% during the quarter. As a result, we remain concerned regarding the Kaplan Higher Education business that could be adversely affected by regulations proposed by the Department of Education and the company’s ‘Kaplan Commitment’ program.
Further, print advertising revenue at The Washington Post plummeted 12% during the quarter. However, Cable division continued to grow, reflecting sustained improvement in Internet and telephone service revenues. Television broadcasting division also showed some strength, rising 3% in the quarter.
Currently we maintain our long-term Neutral recommendation on the stock. Moreover, The Washington Post, which faces stiff competition from The New York Times Company (NYT), holds a Zacks #3 Rank, which translates into a short-term Hold rating.
