Synopsys (SNPS) Share Buyback Raised To $500 Million

Synopsys Inc. (NASDAQ:SNPS) recently announced another refilling of its existing share repurchase program, which has again increased the authorization to $500 million. The step reflects the California-based company’s sound financial position and favorable prospects.

Synopsys' board of directors first approved the stock repurchase program way back in 2002. The company’s financial strength, validated by its strong cash position and liquidity, allows it to continue with its buyback program.

As of Jul 31, 2016, Synopsys’ cash, cash equivalents and short-term investments were $1.089 billion, while short-term debt was only $277.5 million.

In May, the company announced that it would buy back $125 million worth of its common stock under an accelerated share repurchase (ASR) program. We note that the company had nearly $175 million remaining under its normal share repurchase program at the end of the third quarter of 2016.

Meanwhile, the company reported impressive third-quarter results. Revenues saw a year-over-year improvement, mainly on the back of higher adoption of Synopsys’ products and by dint of its strength in hardware products. Additionally, the company provided encouraging fourth quarter guidance and raised its fiscal 2016 outlook.

With respect to earnings surprise, Synopsys’ has surpassed the Zacks Consensus Estimate in three out of the last four quarters with an average positive surprise of 25.1%.

SYNOPSYS INC Price and Consensus

SYNOPSYS INC Price and Consensus | SYNOPSYS INC Quote

Notably, Synopsys shares have surged almost 30% year-to-date, as compared with S&P 500’s return of 6.2%, primarily due to the consistent performance. We believe the company’s aggressive share buyback policy will further boost investors’ confidence, thereby driving up the stock price, going forward.

Synopsys is a vendor of electronic design automation (EDA) software to the semiconductor and electronics industries. We believe the company’s recent product launches, acquisitions and deal wins will boost results, going ahead. Moreover, intellectual properties and global support to promotion and sales provided by the company will likely drive its forthcoming results.

Zacks Rank & Key Picks

Currently, Synopsys has a Zacks Rank #3 (Hold).

Better-ranked stocks include Avid Technology (NASDAQ:AVID) , Infoblox (NYSE:BLOX) and DST Systems (NYSE:DST) . While both Avid and Infoblox sport a Zacks Rank #1 (Strong Buy), DST has a Zacks Rank #2 (Buy).

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