Altra Industrial's New Share Buyback Plan - Analyst Blog

For the first time Altra Industrial Motion Corp. AIMC has announced a share repurchase program. The company will buy back up to $50 million worth of shares through Dec 2016.

This proclamation goes in line with Altra Industrial's strategy to continue rewarding its shareholders. The company had announced a 20% hike in its quarterly cash dividend to 12 cents per share earlier in Apr 2014. The dividend will be paid on Jul 2 to the shareholders of record as on Jun 18.

We believe that Altra Industrial's enhanced capital deployment activities indicate a strong balance sheet. As of Mar 31, 2014, the company had cash and cash equivalents of $61.8 million, compared with $63.6 million as of Dec 31, 2013. Further, long-term debt at the end of the first quarter stood at $249.1 million, down from $261.3 million at the end of fourth-quarter 2013.

Further, Altra Industrial also continues to expand globally. It acquired Denmark-based Svendborg Brakes A/S for cash consideration of nearly €74.7 million ($102.7 million) in Dec 2013.

Going ahead, management expects its cost-control initiatives to aid bottom-line growth. Further, Altra Industrial's share repurchase plan will boost investors' confidence in the stock. Though the company faces headwinds owing to sluggish economic recovery, we believe that a strong balance sheet position and diversified footprints will somewhat mitigate the adverse impact.

Altra Industrial currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks worth considering in the industry include Illinois Tool Works Inc. ITW, Blount International Inc. BLT and IDEX Corporation IEX. All these hold a Zacks Rank #2 (Buy).

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