October 1, 2012
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of auto parts supplier TRW Automotive Holdings (NYSE: TRW ) climbed 10% today after its board of directors authorized a $1 billion share repurchase program.
So what: We Fools love stock buybacks, as they serve to reduce the number of shares outstanding and, in turn, increase EPS and the percentage stake that shareholders have in the company. It's also a sign that management believes its shares are cheap and that they're confident in sustaining operating cash flows going forward.
Now what: The repurchase program will begin in the fourth quarter of 2012 and is expected to be executed over two years. "Our positive outlook and strong capital structure should allow TRW to continue making the necessary investments in our business in support of future growth while enhancing returns to our shareholders," said Chairman and CEO John Plant in a statement. With TRW shares still trading at a cheapish P/E of six, betting on that bullishness might not be a bad idea.
Interested in more info on TRW? Add it to your watchlist.