29 Nov

How NetApp Is Increasing Its Shareholder Value

WRITTEN BY Aditya Raghunath

Share repurchases and dividends

NetApp (NTAP) has stated that capital allocation is one of its top priorities. The company plans to create value for its shareholders through its capital allocation programs. NetApp expects to complete its current share buyback authorization by the end of May 2018. The total share repurchase program stands at $2.5 billion.

Since May 2013, NetApp has returned almost $5 billion to its shareholders through dividends and share repurchases, representing more than  100% of the free cash flow it generated during that timeframe. NetApp paid ~$52 million in cash dividends and repurchased $117 million of its stock in fiscal 2Q17.

How NetApp Is Increasing Its Shareholder Value

During the company’s fiscal 1Q17 earnings call on August 17, 2016, NetApp’s CFO, Ron Pasek, stated, “Q1 cash flow from operations was approximately $228 million versus $129 million in Q1 a year ago. We generated strong free cash flow of $192 million in the quarter. Representing about 15% of net revenues, free cash flow grew over 100% year-over-year.”

Dividend yield

NetApp pays $0.19 per quarter—or $0.76 for the year—in dividends, which is a 3% yield. The dividend yield rose from 2.9% in fiscal 2Q16 and 2.7% in fiscal 3Q16.

In comparison, US-based (SPY) Hewlett-Packard Enterprise (HPE), Cisco (CSCO), and IBM (IBM) had dividend yields of 1.0%, 3.7%, and 3.5%, respectively, in their last reported fiscal quarters.

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