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CA Technologies Drives Investor Wealth through Buybacks

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Buyback trends

CA Technologies (CA) is enhancing shareholder wealth through share buybacks. In fiscal 3Q18, it bought back $53 million worth of shares compared to no shares repurchased in fiscal 3Q17. In the last three quarters on a cumulative basis, CA purchased $143 million worth of shares against $100 million purchased in the same period last year.

The company bolstered shareholder wealth through $100 million worth of share buybacks in fiscal 2017, which is low compared to previous years.

In the chart above, you can see the share repurchase trend in the last five years. CA’s average share buybacks were $404 million per year. From the graph, you can also see that in fiscal 2017, CA made the fewest repurchases, possibly due to its recent acquisitions of Automic and Veracode.

In November 2015, CA’s board of directors authorized share repurchases of $750 million, with $507 million of that still left to be used.

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What’s driving share repurchases?

CA has generated strong free cash flow over the years. In the past five years, it has had an average yearly free cash flow of more than $1 billion. Its free cash flow was $616 million in fiscal 3Q18 compared to $628 million in fiscal 3Q17. It exited fiscal 2017 with $1 billion of free cash flow. Its healthy free cash flow continues to boost its share buyback program.

Other big players in the same industry are International Business Machines (IBM) and Microsoft (MSFT), which bought shares worth $700 million and $2 billion, respectively, in their latest reported quarters.

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