Sally Beauty Holdings Inc. (NYSE: SBH) shares have rallied handily on the heels of the company authorizing a new $1 billion share repurchase program. This is one of those instances when there may be more to the story than meets the eye — and in a very positive manner.

What investors need to know is that the new repurchase program is the fourth such plan that Sally Beauty has authorized. This buyback terminates its prior $700 million share repurchase program, but the company had repurchased $546 million of its common stock as of the end of June. Since May of 2012, the company said that it has repurchased more than $1 billion worth of its common stock.

For starters, Sally Beauty has a market cap of $4.3 billion. The stock trades at less than 16 times next year’s expected earnings per share, but that is without consideration of the new buyback lowering the share count.

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We did find one analyst report who talked up the effort. Sterne Agee analyst Ike Boruchow has a Buy rating and a price target of $30.00. The analyst note said that the size of the authorization is bigger than the company had previously indicated and also the strength is tied to investors buying up the lagging retail stocks recently. For a comparison, Sally Beauty shares were down 8% year to date, versus the peer group being down 3.5% and the S&P 500 Index up 8%.

Boruchow cited several reasons for maintaining a Buy rating: stronger sales comparisons for the Sally Supply segment, new brands, revamped marketing to gain new customers, an increasingly favorable margin outlook and even a CEO succession plan.

The company quote said:

The Company expects to fund the share repurchases through a combination of cash on hand, future cash flow from operations and borrowings. Repurchases may be made at management’s discretion from time to time on the open market, in privately negotiated transactions or otherwise …

Sally Beauty shares were up almost 3% at $27.61, with a consensus analyst price target of $30.13 and a 52-week range of $24.09 to $31.83. This is one of those buybacks that may end up making this stock look even cheaper down the road, when you consider that it could retire up to one-fourth of its shares.

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