=+LG 6 P14–18 Stock repurchase Heidelberg Cement, one of the world’s largest building materials companies is concerned about preserving the wealth of its stockholders during a cyclical downturn in the building and construction business. The company has a constant dividend payout of €2.5 tied to a target payout ratio of 30%. Heidelberg Cement’s management is preparing a share repurchase recommendation to present to the firm’s board of directors. The following data has been gathered from the last 2 years.
2017 2018 Earnings available to common stockholders €805,585,200 €900,000,000 Number of shares outstanding 198,420,000 198,420,000 Earnings per share € 4.06 € 4.54 Market price per share € 89.89 € 90.00 Price/earnings ratio 22.14 19.82