These 2 Companies Have Been Buying Back Their Shares

Every now and then, I like to keep track of companies which have been buying back their own shares.

Peter Lynch, the legendary manager of the U.S.-based Fidelity Magellan Fund, had included buybacks as one of the criterion in his investing checklist. To Lynch, it’s a good sign if a company or its insiders are buying shares as management may think the stock is undervalued.

Of course, management may be tasking the company to buy back shares for other reasons other than its stock being undervalued (some other reasons would be to offset dilution). And even if management feels that the stock’s undervalued, they may well be wrong in their assessment too. But, companies that have been buying back their own shares may still be worth digging further into.

With these in mind, let’s take a look at two companies that have been engaged in buybacks these past few weeks.

1. Oxley Holdings Ltd (SGX: 5UX)

A real estate developer and investor, Oxley is a bona-fide multinational company with its presence in eight geographical markets across Europe and Asia.

The company’s development portfolio includes residential, commercial, and industrial properties. Meanwhile, it has investment properties that are in different sectors, such as industrial, hospitality, and commercial. In Singapore, Oxley has interests in hotels (Novotel Singapore and IBIS Singapore) and an industrial property (Space@Tampines).

In the month of April thus far, Oxley has bought shares on two occasions (8 April and 12 April), spending a little over S$27,000 on a total of 65,100 shares.

At its closing share price of S$0.44 on Tuesday, Oxley is valued at 11.8 times trailing earnings. The company’s latest financials were released in late January and were for the quarter ended 31 December 2015. In that period, the company reported a 25% year-on-year plunge in total revenue to S$178 million. But, Oxley’s profit attributable to shareholders soared by 107% to S$46 million on the back of a 553% spike in share of profit from joint-ventures and associates.

2. Powermatic Data Systems Ltd  (SGX: BCY)

Headquartered in Singapore, Powermatic Data Systems distributes information technology products. The brands that the company distributes include Adaptec, AOpen, Panasonic, and Samsung, just to name a few.

Powermatic Data Systems had bought shares of itself on just one occasion this month. The date’s 7 April and the company had snapped up 70,200 shares of itself for a grand total of S$66,180.

The company’s latest financials are for the six months ended 30 September 2015, which makes up the first-half of its fiscal year ended 31 March 2016. The six month period saw Powermatic Data Systems turn in some healthy growth numbers – revenue was up 13% to S$6.9 million while post-tax profit from continuing operations had climbed by 44%.

The company’s shares closed at a price of S$0.93 on Tuesday, giving it a trailing price-to-earnings (PE) ratio of 10.5.

Foolish Conclusion

Companies that are engaged in share buybacks are just a good starting point for investors looking for opportunities. It’s up to the individual investor to dig further and determine for him or herself whether a company’s shares are actually cheap or not.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor James Yeo doesn’t own shares in any companies mentioned.