In the past eight years, blood plasma group CSL Limited (ASX: CSL) has launched six annual share buybacks. Today, the company announced its seventh, and the share price has climbed around 1%.
CSL will buy back up to $950 million worth of shares, after buying back close to $900 million of shares since October 2013. At today's price of around $73.05, that represents around 3%, or roughly 13 million shares.
CSL chairman John Shine told shareholders at the annual general meeting that "buybacks remain an effective way to manage our capital that delivers improved investment returns for shareholders."
He added that since the buyback began, CSL has repurchased around 23% of the company's shares on issue. Mr Shine says the previous six buybacks totalled around $3.3 billion and have boosted earnings per share by more than 15%.
Earnings per share growth will again exceed profit growth, as shareholders benefit from the effects of past and current share buybacks. In fact, since 2012, CSL has no common stock on its balance sheet, and has been forced to create a special reserve to account for the buybacks.
CSL's total shares outstanding peaked at close to 600 million in 2009. Today, that figure stands at around 474 million.
The company is truly a marvel at generating returns to shareholders. Since listing in 1994, CSL has managed to deliver compound annual growth in net profit of 24.4%. To give you an idea of how good that is, had you bought $10,000 worth of shares in CSL in 1994, they would now be worth a cool $1.1 million.
Sonic Healthcare Limited (ASX: SHL), Ramsay Health Care Limited (ASX: RHC) and Primary Health Care Limited (ASX: PRY) are all regarded as high quality Australian health care companies, but only Ramsay can hold a candle to CSL's performance. Ramsay has delivered an average return to shareholders of 26% over the past decade, while Sonic and Primary shareholders have seen returns of 9.5% and 2.3%.
Currently trading on a trailing P/E ratio of 24.1x, CSL shares appear cheap given the quality of the company, and Foolish investors may want to add the company to their watchlists.
