All share buybacks have different results and metrics. VETVermillion generated 275 million in FFO, in Q3 2024.
Investment analysts are asking companies to give 100% of their FCF back to shareholders.
In Q3, 2024 vermillion had 154 million of FCF, considering a share price of 13 dollars a share they could buy back 11,846,153 shares.
Vermillion has roughly 155 million shares so this suggests they could buy back 7.64% of the outstanding shares in a single quarter, for example in cash Q3, 2024.
The impact of a share buyback of this nature would be the following based on Q3 numbers.
- Increase in subsequent quarters of 21 million in FFO on a per share basis
- Increase in subsequent quarters of 12 million in FCF on a per share basis
So, every investment in share repurchases that Vermillion makes takes approximately 4 years to recoup 100% of the FCF. That is a 25% return per year on share repurchases.
Vermillion simply throws off too much cash (FCF), and realistically could not acquire all the shares to consume all their 100% FCF, it would have a significant impact on the market, and drastically reduce the float.
What is significant here is the ability of Vermillion to buy back shares, and because of its robust FCF they can significantly buyback large amounts of stock.
Other companies are buying back their stock and claim they are giving 100% back to shareholders, but in no way do they have the capacity to buy back 7.64% in a single quarter.
As a comparison, if ARX were to buy back 7.64% of their shares in a single quarter that would cost the company and look like this. They would have to buy back 45.27 million shares at a cost of $1,187,432,100 dollars to do the same equivalent buyback. In Q3 2024, ARX had 134 million in FCF that might barely cover their dividend.
The delivered cash generated by VET is crazy and the stock is trading well below the metrics that it is delivering on a quarterly basis.
Compelling investment cash shares should be trading in the $25 dollar range. It will not be in this price range for long.
IMHO
MHO