Rexel's Share Buyback: A Strategic Move or a Risky Gamble?
6min read Rexel S.A. (RXL.PA), a leading European distributor of electrical and industrial supplies, has made headlines with its recent share buyback program. Between April 28 and May 2, 2025, the company purchased 233,473 shares at an average price of €24.18, marking a significant step in its capital allocation strategy. But what does this mean for investors? Let’s break down the data and implications.
The Buyback in Detail
Rexel’s purchases were staggered across four trading days:
- April 28: 60,000 shares at €23.59
- April 29: 60,000 shares at €23.99
- April 30: 56,650 shares at €24.31
- May 2: 56,823 shares at €24.88
Ask Aime: What does Rexel's recent buyback program mean for investors?
This brought the total shares repurchased in the period to 233,473, with an overall average price of €24.18. The move aligns with a larger 2 million share buyback program announced in April, aimed at boosting earnings per share (EPS) by up to 4%.
Ask Aime: "Will Rexel's share buyback boost its earnings?"
During this period, Rexel’s stock rose from a low of €23.29 on April 28 to a high of €25.38 on May 2—a 9% increase. While the buyback may have contributed to this upward trend, external factors like Q1 sales growth and strategic initiatives also played a role.
Market Impact and Strategic Context
Rexel’s buyback comes amid positive momentum:
1. Q1 2025 Sales: The company reported €4.825 billion in sales, a 1.4% increase year-on-year, driven by strong performance in North America (+3.8%) and stabilization in Europe.
2. Digital Growth: Digital sales now account for 33% of total revenue, up 241 basis points from 2024, reflecting progress in its Axelerate 2028 strategy to enhance operational efficiency.
3. Dividend Payout: A €1.20 per share dividend, approved at the Annual Shareholders’ Meeting on April 29, reinforces its commitment to shareholder returns.
These factors suggest Rexel is in a strong position to execute its buyback program. However, risks linger.
Risks and Red Flags
While the buyback signals confidence, two issues demand scrutiny:
1. CFO’s Share Sale: On April 17, Rexel’s CFO, Jean-Luc Moreau, sold 10,000 shares at €29.00, netting €290,000. While small in scale, insider selling at a record high can spook investors. Historically, such moves often raise questions about leadership’s true confidence in the company’s trajectory.
2. Tariff Risks: Rexel’s CEO highlighted ongoing macroeconomic challenges, including potential tariff impacts in North America. If these pressures materialize, they could dent sales growth and profitability.
The Bottom Line: A Bullish Bet, but with Strings Attached
Rexel’s buyback program is a strategic move to boost EPS and signal undervaluation, supported by solid Q1 results and digital growth. The stock’s climb to €25.38 on May 2 underscores investor optimism. However, the CFO’s sale and tariff uncertainties introduce caution.
Key Takeaways:
- Buy Signal: The buyback aligns with a €28.50 support level (set by a prior institutional sale), and sustained purchases above this price could solidify the bullish narrative.
- Risk Factor: Over 60% of the 2 million share target remains, requiring aggressive execution. A drop below €28.50 or further insider selling could reverse sentiment.
Final Verdict
Rexel’s share buyback is a calculated gamble—a bet that its operational strength and strategic initiatives will outweigh macro risks. For investors, this is a “Buy with Caution” play. The stock’s performance hinges on:
1. Executing the remaining buyback at or above €28.50,
2. Avoiding further insider selling, and
3. Navigating tariff headwinds without sacrificing growth.
While the bulls have reasons to cheer, Rexel’s journey from undervaluation to sustained outperformance will require more than just share repurchases—it will demand execution excellence.
Word Count: 650
Key Data Points:
- Total shares repurchased (April 28–May 2): 233,473
- Average buyback price: €24.18
- Stock price range during period: €23.29–€25.38 (+9%)
- Q1 sales growth: +1.4%
- Digital sales penetration: 33% of revenue
