Strong cashflow: Recently, CSL Ltd (ASX: CSL) announced a new on-market share buyback of up to A$1 billion, the largest ever undertaken by the company as part of its regular buyback program. Through its previous buybacks, CSL has purchased 23% of its shares at some A$ 5.16 billion, contributing to a 23% increase in earnings per share. The company believes that another buyback indicates CSL’s strong financials and cashflow. Also, this helps the company to increase shareholder dividends and invest in manufacturing expansions and innovation. Company CEO comments that earnings per share growth this financial year will again exceed profit growth expectations as shareholders benefit from the ongoing effect of past and current share buybacks. For full year 2015, CSL recorded a net profit after tax of $1,379 million, an increase of 6% on reported basis from the prior comparable period. Sales increased 2% while EBIT was higher by 7% for the same period. Also, with its latest acquisition of Novartis influenza vaccines business, the company is now the second largest influenza vaccine manufacturer in the world. Looking ahead, CSL expects strong underlying demand for its products to continue in FY16, with sales growth similar to gains achieved in FY15. Net profit after tax is expected to grow by around 5% with earnings per share growth to exceed profit growth. This does not include the gain on acquisition, integration costs and operational contribution from Novartis deal. With high P/E ratio, we rate this stock “Expensive” at the current share price. To read the complete report click here
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