RE:Return on cash v buy backJRafflesUK wrote:
At a PE of 13.1 (StockHouse), the earnings return per share is 7.63% (100/13.1) with growth prospects.
The cash held by KL may generate ~ 1%
It does not seem to be a complex decision of But Back or Hold Cash
When you put it that way it makes a lot of sense. Of course they should hold back enough for current exporation expenses , possible Detour Lake Expansion etc.
Nevertheless on weakness buying back some shares seems a good use of otherwise idle capital.
The trick of course is to know what share price is a weak price but I would saythat when its under $50 CDN and especially if the shareprice is on a downtrend on a given daythat some buying from KL woud be appropriate.
Increasing the dividend might b nice but that should probably be done sparingly so as to keep it growing annualy but still in line with other larger producer dividend rates.
A lower share count not only will tend to increase the share price over time but will still leave useful room to use shares as currency in any future takeovers , meanwhile the resulting higher shareprice and less available free cash might tend to discourage Newmont Barrick etc. from trying for a cheap takeout of KL.