It's turning out to be another rough session for ASX 200 shares so far this Thursday. At the time of writing, the S&P/ASX 200 Index (ASX: XJO) has lost 0.29% this session, putting it back to around 8,330 points. But let's talk about one ASX 200 share that is comprehensively bucking this broader-market gloom.
That ASX 200 share is IPH Ltd (ASX: IPH). The IPH share price closed at $4.72 yesterday afternoon. But this morning, those same shares opened at $4.91 each and shot up as high as $4.98 – a gain worth 5.51% at the time.
Presently, investor sentiment has cooled off a little, but IPH shares are still up a rosy 3.4% at $4.88.
IPH is an intellectual property (IP) services company that provides services like patent filing, trademark protection, and enforcement. It operates in dozens of countries using a portfolio of subsidiary brands.
Why is this ASX 200 share beating the market today?
The outperformance we are seeing with this ASX 200 share today seems to stem from an announcement IPH made to investors this morning before market open.
This announcement was short and sweet. It told investors that IPH has decided to extend its active on-market share buyback program.
Back in May, IPH revealed that it would extend its buyback program to up to $40 million worth of share buybacks by May 2025. Well, today, IPH has revealed that it has extended this limit to up to $75 million. Here's how the ASX 200 share justified this move:
The Board of IPH believes the buy-back will be an efficient use of capital and is consistent with the Company's focus on ensuring an effective mix of continued investment in the business to support earnings growth while returning excess cash to shareholders.
The buy-back program will not impact the Company's existing dividend policy.
It's no surprise that investors reacted so positively to this announcement. Share buybacks usually boost the returns from a company's shares as they reduce supply. Under the laws of supply and demand, this usually results in higher prices. It also increases existing investors' ownership stake in the company.
Additionally, share buybacks can increase earnings per share (EPS), as a company's earnings are divided between fewer outstanding ASX 200 shares. This saves the company money on dividend payments, as the company now has to attach a dividend to fewer shares.
Share buybacks benefit existing shareholders in several ways. As such, it's no surprise that the IPH share price reacted so positively to this news today.
IPH share price snapshot
This ASX 200 share has had a rough year in 2024. Despite today's lift, IPH shares remain down by close to 24% in 2024 to date and by 26.3% over the past 12 months. Investors have also lost half of their capital since October 2022.
At the current IPH share price, this ASX 200 share has a price-to-earnings (P/E) ratio of 19.56, with a trailing dividend yield of 7.19%.
