In Wednesday’s trading update, RPC confirmed that it was seeking to refresh its ability to buy back shares.
After factoring in the group’s current valuation and the long-term prospects of the business, RPC’s board determined that the current share price “significantly undervalues the performance to date”.
The firm specified that the programme will be conducted over a period of up to 12 months and will be kept continually under review.
Markets quickly digested the news, sending RPC’s share price up by nearly 7% to 900p within the first half hour of trading.
The FTSE 250 packaging company tucked the announcement inside its Q1 trading update, which pointed to encouraging trading conditions for the firm over the period.
Revenues for the quarter ending 30 June 2017 came in “well ahead” of last year at £960m, thanks to several strategic acquisitions, most recently absorbing Michigan packager Letica and European container manufacturer ESE World.
However, the firm stressed that it does not anticipate making any further significant acquisitions and would be focusing on creating organic growth, improving margins and generating strong cash flow.
The Share Centre’s investment research analyst Helal Miah said management’s commitment to focus on integrating RPC’s recent purchases “should provide some welcome relief” to investors who were critical of the firm’s M&A dealings and accounting practices.
Despite the fact that “RPC’s share price has had a fairly turbulent 2017 so far, despite the group reporting good full year and interim numbers,” Miah said, “we continue to look upon the shares and the sector favourably.”
He continued: “It is being driven forward by long-term structural developments such as the ongoing transition towards online shopping and the need for packaging materials. All the while, this is a company that continues to build market share and economies of scale.
“Combine all of this with the progressive dividend, we continue to recommend RPC as a ‘buy’ for investors looking for capital growth and some income and who are willing to accept a medium to higher level of risk.”
