ASX-listed BlueScope Steel Limited (ASX: BSL) shares were trading 8% higher today as the broader market, or S&P/ASX 200 (INDEXASX: XJO), trended higher.
BlueScope is the steel producer which spun out of BHP in 2002 and has operations in Australia and throughout the oceanic region. It’s perhaps best-known for its Colourbond range of products.
What Happened?
In a market update, BlueScope announced it will undertake a $250 million share buyback. In an update to the market, BlueScope said it will re-enter the market to buy back some of its own shares after a recent buyback ended.
“As we approach our goal of net cash on the balance sheet of $200 million to $400 million, this announcement forms part of our FY2019 capital management program,” BlueScope CEO Mark Vassella said.
“With the transformed business continuing to generate strong cash flows, we are also able to pursue a mix of investing in the business, acting on appropriate M&A, such as the acquisition of the YKGI assets in Malaysia, and delivering returns to shareholders.”
What Now?
The Melbourne-based BlueScope recently announced a strong 2019 first-half underlying EBIT outlook amid continued strength in the USA, Australia and New Zealand (click here to learn what EBIT and EBITDA means).
Despite this, the BlueScope share price has been sold lower in 2018 from a July peak of around $18.50 to today’s share price of $12.44.
While this may indeed be an ideal opportunity for shrewd investors to swoop in and buy shares in one of Australia’s largest steel companies, I’m hesitant given the company’s chequered past and fickle profitability.
I prefer companies with strong franchises, pricing power and exceptional long-term growth prospects…
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