By Dhirendra Tripathi
Investing.com – Dollar Tree stock (NASDAQ:DLTR) jumped 13% on Wednesday after the company expanded its share buyback program.
With a fresh approval for $1.05 billion, Dollar Tree is now willing to pump in $2.5 billion into buying back its own shares.
The aggregate amount includes around $1.45 billion available for repurchases under the Board’s previous repurchase authorization approved on March 2, 2021.
Dollar Tree has repurchased shares amounting to $950 million in the ongoing financial year that runs through January.
Its equity base comprises 224.911 million shares and it had a market cap of $19.54 billion as of close Tuesday. At this price ($86.28) and commitment then -- the buyback has the potential to reduce the share count by around 13%.
The company said it will buy back shares from time to time in the open market or through privately negotiated transactions. There is no expiration date to the exercise.
A buyback helps to increase earnings per share as the stock count goes down. It thus boosts shareholder returns. A share buyback usually happens when the company has no better use for the cash on its books or when investors want their money back.